Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

LLOYDS BANK BILL

Order for Third Reading read.

To be read the Third time tomorrow.

Oral Answers to Questions — EDUCATION AND SCIENCE

O-Level Mathematics

Mr. Madel: asked the Secretary of State for Education and Science what percentage of pupils in secondary schools in England took O-level mathematics in 1980; and what percentage achieved a pass.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): From the latest available information it is estimated that 31 per cent. of all English school leavers in 1978–79 had attempted O-level in mathematics, and 21 per cent. were awarded grades A to C.

Mr. Madel: Do those figures indicate the percentage increase in the number of pupils who passed O-level mathematics in the past 10 years? Is it the Government's view that in-service training must be improved so that the quality of teachers improves, which will lead to more pupils passing examinations?

Dr. Boyson: The figures for O-level passes last year were only half a percentage point higher than they were 10 years ago—[HON. MEMBERS:"NO".] I am sure that hon. Members are interested, so I repeat that the figure is only half a percentage point higher than 10 years ago for the number of pupils gaining O-level mathematics, grades A to C. I agree with my hon. Friend that there is a requirement for more good maths teachers, and also for the retraining of existing teachers so that they become better maths teachers.

Mr. Dixon: Will the Minister give an estimate of how many youngsters will not be taking CSEs after the Easter term because of the Social Security Act 1980? What advice will he give to head teachers about advising youngsters to return to school after Easter to take examinations? Is he aware that if they do they will be denied social security benefit until the first week in September?

Dr. Boyson: Any headmaster who has a pupil in his school likely to pass GCE O-level mathematics should

suggest that the pupil stays at school and passes his examination. That is the beginning of a good future education.

School Standards (Reports)

Mr. Christopher Price: asked the Secretary of State for Education and Science if he will now arrange for reports of Her Majesty's inspectors about standards in schools to be published annually.

The Secretary of State for Education and Science (Mr. Mark Carlisle): I assume that the hon. Gentleman has in mind Her Majesty's inspectorate's reports on the effects on the education service of local authority expenditure policies. I shall consider the question of publication of any future years' reports at the time of their preparation.

Mr. Price: Does the Secretary of State agree that it does not make sense to publish information one year and then to deny the public that information in future years? Will the right hon. and learned Gentleman's forthcoming statement on the curriculum define the legal basis of the curriculum? Is music part of the curriculum.

Mr. Carlisle: The first point made by the hon. Gentleman will be taken into consideration. He would not expect me, at this stage, to commit myself or any successor, to such publication. On his second point, the curriculum document does not attempt to alter any legal definition or provisions for education.

Mr. van Straubenzee: Did my right hon. and learned Friend need to take advice to answer that question? If so, what proportion of those who advised him were at work yesterday?

Mr. Carlisle: I congratulate my hon. Friend on his ingenuity. I am glad to say that 66 per cent. of the civil servants in the Department of Education and Science at Elizabeth House were truly working yesterday. That is a commendation of their sense of responsibility and common sense.

Mr. Kinnock: In furtherance of the question raised by my hon. Friend for Lewisham, West (Mr. Price), will the Secretary of State ensure that future reports similar to the one that we recently received will be published so that there can be year-on-year accounting to the general public, the teaching profession, the interested community and parents, as well as hon. Members, of the way in which financial policies affect the standards of provision and performance in schools? In the event of next year's report being published and demostrating a further deterioration, what will he do? Will he remain inactive, as he has been this year?

Mr. Carlisle: We shall consider at the appropriate time whether the future report should be published. I find it somewhat odd that the hon. Gentleman should attempt to tie any successors to the publication of the report when my predecessor chose never to publish it.

Mrs. Kellett-Bowman: Hear, hear.

School Uniform Grants

Mr. Greville Janner: asked the Secretary of State for Education and Science which local authority education departments no longer provide school uniform grants.

The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): This information is not available within my Department.

Mr. Janner: Does the Minister agree that in areas in which clothing grants of this sort are not available the wearing of school uniform should not be compulsory, bearing in mind that it is a heavy additional burden upon poorer families, especially in areas such as Leicestershire where the burden is already growing because of the Tory councils' cuts in education allocation?

Mr. Macfarlane: Yes, I accept the main thrust of the hon. and learned Gentleman's remarks. I accept that it is a heavy burden on many families. For that reason, there is no statutory provision by the Government concerning the wearing of school uniform. The power to decide whether to prescribe uniform dress is usually placed with the governors or the head teacher at each school, and I think that that is right. The Leicester local education authority may have ceased giving assistance with school clothing some time ago, but the authority advised all its schools to be flexible on school uniform demands.

Mr. Beith: Does the Minister agree that local authorities should provide uniform grants in the light of the fact that he is bringing before the House regulations that will require schools taking part in the assisted places scheme to pay means-tested school uniform grants to every pupil eligible for them?

Mr. Macfarlane: The first part of the hon. Gentleman's supplementary question does not arise because it is not the Government's intention to make a central imposition. Therefore, the rest of the supplementary question does not arise.

Education Resources

Mr. Hal Miller: asked the Secretary of State for Education and Science whether he is satisfied with the volume of resources available for education at primary and secondary level in the light of the recent report of Her Majesty's inspectors.

Mr. Mark Carlisle: In 1980–81, the year to which the report relates, we had planned to spend more on our schools than in 1978–79, even though pupil numbers were expected to fall by nearly 5 per cent. Planned expenditure on schools in the immediate future years is again necessarily limited by what the country can afford but continues to allow for a higher cost per pupil in school than in 1978–79.

Mr. Miller: As so many parents are concerned about the pupil-teacher ratio and as such a high proportion of resources goes into the payment of teachers, can my right hon. and learned Friend give us any good news about the pupil-teacher ratio in this year and the following year?

Mr. Carlisle: As I said in Thursday's debate, the pupil-teacher ratio in 1979–80 was the best ever at 18·7:1. The figures for this year will be better still at 18·6:1, which will be the lowest ever pupil-teacher ratio in this country.

Mr. Flannery: Is it not a fact that the cuts in education are revealed clearly in the inspectorate's report which we debated last Thursday? Does the right hon. and learned Gentleman accept that the cuts bear most heavily on the most needy section of the community, and that equipment,

books and all the other items that education needs are sinking lower and lower in the list of provisions? Is not that disgraceful when compared with the assisted places scheme, on which more money will go to provide education, when the majority of children will be made to suffer while a select minority benefit?

Mr. Carlisle: I am grateful to the hon. Gentleman for giving the House a repeat of the speech that he made on Thursday. I am bound to say that it sounds no better the second time. I do not accept what he says. I have always accepted that reducing expenditure on education is bound to have some effect on the standard of provision, but I do not accept that we are unduly penalising one section of society.

Mr. Peter Bottomley: Will my right hon. and learned Friend ensure that, whenever his inspectors visit a school, a report of their visit is supplied to the governors.

Mr. Carlisle: Whenever the inspectors report on anything that they find in a school the report is made available to the head teacher, the staff and, I think, to the governors.

Mr. Allen McKay: Will not the Government's plan to close 1,000 primary schools in the implementation of public spending cuts have an adverse effect on the pupil-teacher ratio?

Mr. Carlisle: In January the pupil-teacher ratio was at its lowest ever at 18·6:1 compared with 18·9:1 when the previous Labour Government left office. We must make some reductions in the number of schools because of the enormous fall in the number of pupils of primary school age. If we can achieve that rationalisation, it will have a helpful effect on class sizes.

Departmental Economies

Mrs. Renée Short: asked the Secretary of State for Education and Science what proposals have been made by Sir Derek Rayner for economies in his Department; what progress has been made; and if he will make a statement.

Mr. Mark Carlisle: Three scrutinies under the guidance of Sir Derek Rayner have been undertaken in my Department, on the administration of the teachers' pension scheme, the administration of student awards, and the Department's statistical service. An action document has been issued following the pensions scrutiny and the findings of the other two are under review.

Mrs. Short: I thank the right hon. and learned Gentleman for his reply. Is he able to say what the result of the pension scrutiny—which will affect teachers in the private sector—is likely to be? Is he able to give the House any information on the result of the discussions that took place recently with the Minister of State?

Mr. Carlisle: No. I cannot give that information without a specific question being tabled. I am prepared to send a copy of the action document to the hon. Lady. The document sets out a discussion between Sir Derek Rayner and the Minister of State on various aspects of the recommendations.

Teachers (School Meals)

Mr. John Carlisle: asked the Secretary of State for Education and Science what is his latest estimate of the cost of providing free school meals to those teachers in schools in England and Wales who receive them.

Mr. Macfarlane: The estimated cost to local education authorities in England is about £27 million. Questions about Wales are for my right hon. Friend the Secretary of State for Wales to answer.

Mr. Carlisle: Does my hon. Friend agree that although teachers who have responsibility for supervision at meal times have some legitimate claim for a free meal, the system is being abused and a great saving could be made by local authorities if they insisted that only those who supervise during meal times have a free meal?

Mr. Macfarlane: I endorse the first part of my hon. Friend's supplementary question. Those engaged on supervisory duties are entitled to free school meals. The entitlement to a free meal was confirmed by an agreement in 1968 between representatives of local education authorities and of the teachers. If there are abuses, my hon. Friend and other hon. Members will no doubt make them known to those responsible for administering the services in the local education authority.

16 to 19-Year-Olds

Mr. Edwin Wainwright: asked the Secretary of State for Education and Science if, in his consultations on the report on education for 16 to 19-year-olds, he will pay special regard to the need to make provision for this age group to meet the needs of industrial training for the 1990s.

Mr. Macfarlane: My right hon. and learned Friend and I are anxious that the education service should provide the vocational education required by the nation in the years ahead. The education service already makes a vital contribution and it is our intention to play a full part in further development.

Mr. Wainwright: When will the Government act on the report? Is he aware that any cuts in education deal harshly with youths aged between 16 and 19 years? Does he accept that Britain has fewer youths entering further education than any other country in Western Europe? When will the Government do something about it?

Mr. Macfarlane: First, the Government did not ask for formal comments on the 16–19 review, which I chaired for 22 months. I welcome the discussion which it has aroused among local education authorities. The review group acknowledged that it is vital that the views of those concerned are heard freely and clearly. Many local authorities have been engaged in this assessment over the past few years. Some aspects of it are now coming to fruition. No doubt other authorities will scale up their activity over the next few years. I have acknowledged that our record, when compared with that of other Western industrialised countries, leaves much to be desired. I hope that local education authorities will acknowledge the importance of post-16 training, as did our manifesto commitment. The Conservative Party said that a Conservative Government would review the relationship between schools, further education and training. That was a distinct manifesto commitment.

Sir David Price: Is my hon. Friend satisfied that in practice there is a close enough working relationship between the Manpower Services Commission and the individual local education authorities to ensure that the post-16 training given to our young people will equip them with real jobs in the next century?

Mr. Macfarlane: The Government and the Manpower Services Commission, the Department of Employment and the Department of Education and Science, are considering possible new initiatives on vocational preparation for young people. A more flexible attitude to apprenticeships and adult retraining is included. I hope that the special programmes board will include a greater representation of those responsible for the education service.

Mr. Whitehead: As we understand that the MSC will propose a 10-year course which will lead to an additional year of full-time educational training, what is the response of the Department to those proposals, particularly in view of the differential rewards now achieved by people on MSC courses as against those in full-time education?

Mr. Macfarlane: I am sorry to tell the hon. Gentleman that I am not prepared to anticipate anything at the moment. The matter will have to be assessed over the next few months.

School Meals

Mr. Andrew F. Bennett: asked the Secretary of State for Education and Science how many children were in receipt of free school meals in England for the last date for which figures are available.

Mr. Macfarlane: In October 1980, 724,257 pupils in England were receiving a free school meal, which represents a slightly higher proportion of pupils present than was the case in October 1976.

Mr. Bennett: Does not the Minister agree that it is hardly surprising that that represents an increase, although a small one, in view of the large number of people who are unemployed and are now on social security? Does the Minister also accept that many local authorities have made it harder for people to qualify for free school meals by failing to increase the criteria in line with inflation?

Mr. Macfarlane: We have discussed that problem before at Question Time. I tell the House once again that each local education authority is responsible for determining its own policy for entitlement to free school meals. I am happy to repeat that two-thirds of the authorities in England have adopted criteria of entitlement which are more generous than the statutory minimum.

Mr. Mellor: Does my hon. Friend agree that the large number of children currently receiving free school meals makes it clear that that service is as widely available as it needs to be? Does he not agree that, given the costs to the community of providing that concession, it makes nonsense of the proposals of some Labour local authorities, such as the Inner London Education Authority, arbitrarily to reduce the price of school meals, at enormous cost to the ratepayers?

Mr. Macfarlane: I endorse the comments of my hon. Friend. Anything which increases the costs to the


ratepayers, as well as proposals such as those by the ILEA to reduce the price of school meals to 25p, is unreasonable and unrealistic in this day and age.

Mr. Field: Is the Minister being straight with the House when he says that that is a local authority matter? Is he not aware that his Department issued guidelines for local authorities on eligibility for free school meals and that, now those have been implemented, there has been a fall of nearly 200,000 in the number of children who previously claimed free school dinners and who are not doing so now?

Mr. Macfarlane: That figure has fluctuated over the past 10 or 11 years. The hon. Gentleman knows from the reply which I gave him on 20 February and from the reply which my hon. Friend the Member for Brent, North (Dr. Boyson) gave him on 23 January, that the figures have fluctuated. However, the guidelines have been an integral part of the Department of Education and Science, following the passage of the Education (No. 2) Act 1980, which transferred to local authorities the responsibility for determining their policy.

Research Scientists

Sir David Price: asked the Secretary of State for Education and Science if he will take steps, in conjunction with the University Grants Committee and the research councils, to ensure that research scientists on publicly funded projects are permitted and encouraged to share financially in the results of their work, both corporately and individually.

Mr. Macfarlane: Employees of the research councils and the universities are covered by sections 39 to 41 of the Patents Act 1977, which entitles them to a fair share of the benefit their employer derives from inventions patented under that Act.

Sir David Price: In the light of my hon. Friend's reply, may I ask if he is aware that I know of instances in public research establishments where a more fruitful partnership with private industry is being frustrated by the rigidity of the financial rules? Perhaps the responsibility is not that of my hon. Friend but of the Treasury.

Mr. Macfarlane: The responsibilities overlap a number of Departments, including the NRDC, and universities and the research councils, for which my right hon. and learned Friend the Secretary of State has responsibility. I am aware of some of the anomalies. That matter was considered by the Committee of Vice-Chancellors and Principals in 1976, when it produced a report on patents and the commercial exploitation of research results. There is an ongoing discussion at the moment to see whether there could be any alterations to those procedures and regulations relating to inventions made by members of staff. That matter is under review.

Mr. Nelson: Will my hon. Friend confirm that where no patents are taken out, or where the question of patents does not arise in funding, no undue restrictions are attached to funding made by either the University Grants Committee or the research councils?

Mr. Macfarlane: I cannot give my hon. Friend that assurance. It takes several years to grant a patent. So far, no employees have benefited from that provision because

the Act came into force in June 1978. A number of exgratia awards have been made to inventors, but suffice it to say that my Department is keeping the matter closely under review.

Mr. Cormack: Will my hon. Friend gently suggest to his officials that the Department of Education and Science could give a lead by deleting from parliamentary answers such words and phrases as"ongoing", and"this moment in time"?

Mr. Macfarlane: I detect a note of acrimony from my hon. Friend. We shall make not a gentle observation, but a most robust suggestion.

Education Standards

Mr. John Evans: asked the Secretary of State for Education and Science if he is satisfied with the progress that has been made in improving education standards since he took office.

Mr. Mark Carlisle: Although expenditure on education is necessarily restricted to what the country can afford, the Government remain committed to the objective of maintaining and improving the quality of education.

Mr. Evans: Has the Secretary of State been made aware of the growing feeling of hundreds of thousands of parents to the effect that, far from their children's education standards improving under the Tory Government, they are being savagely attacked?

Mr. Carlisle: I do not accept that. I accept what I said last Thursday, that clearly there is evidence that, whereas overall the situation is satisfactory, in certain areas there is evidence of weakness in school provision. I repeat what I said to the hon. Gentleman on that occasion, that it does not benefit the case to exaggerate.

Mr. William Shelton: Will my right hon. and learned Friend cast his mind back to the recent Her Majesty's Inspectorate report on the Inner London Education Authority and the criticism in it? Does not he agree that there is far more to education standards than just the money involved?

Mr. Carlisle: I certainly agree. As my hon. Friend says, the Her Majesty's Inspectorate report on ILEA highlighted that matter clearly.

Mr. Kinnock: The Secretary of State remains somewhat self-satisfied. Does he accept that the inspectorate's report was not exaggerating and that it specified adverse curriculum effects in science and maths as well as in the minority subjects? Does he think that the Government's commitment to maintaining and improving the standard of education can be taken seriously when that report says that in large areas of provision, the provision is unsatisfactory and that, even where it is satisfactory, further cuts are depressing standards of opportunity and provision, afflicting our children as a result?

Mr. Carlisle: I have never suggested that the inspectorate's report was in any way exaggerated. I have always suggested that it was an objective report, and I published it on that basis. I remind the hon. Gentleman that it is right. It pointed out certain areas where there were shortages in certain institutions, against the background of a generally satisfactory situation in the vast majority of institutions. The real difference between the hon.


Gentleman and myself, as he said in the debate last Thursday, is that he objected to my saying that we should only spend on education what we can afford as a country. To object to that is a recipe for higher rates, higher taxes, higher inflation and higher unemployment.

Mrs. Knight: Has my right hon. and learned Friend noted recent reports that certain ethnic groups in schools where an overwhelming majority of pupils is from another ethnic group are suffering as a result of falling standards'? Will he consider that matter and try to do something about it?

Mr. Carlisle: I have seen those reports. The matter relates to the Schools Council report which was published yesterday. I shall study its implications. I have also received the interim report by the Rampton committee on the education of West Indian children. I shall also study that report.

Examination Results (Publication)

Mr. Butcher: asked the Secretary of State for Education and Science if he will require subjects taken and grades achieved in public examinations to be published by secondary schools.

Dr. Boyson: My right hon. and learned Friend is proposing to do so.

Mr. Butcher: Is my hon. Friend aware that his unequivocal statement will be welcomed by the vast majority of parents and that the provision of the information will be of great benefit to the education service as a whole?

Dr. Boyson: I agree entirely. It is the intention that each maintained school will provide annually the most recently available grading results obtained by pupils in GCE and CSE examinations and will also show the number of pupils in the relevant age groups.

Mr. Cryer: Does the Minister accept that exam results are not the sole criterion of good education standards? Is he aware that, by adopting that policy, he is trying to turn maintained schools into the shoddy little private prep schools that he and his right hon. and hon. Friends so much favour?

Dr. Boyson: I have never taught in or sent my children to these"little private prep schools", which must be found in the hon. Gentleman's area. I agree entirely that, as well as academic standards, sport, art, music and the relationship between staff and children are also important in schools. However, a pupil will not go to university unless he first gets O and A-levels.

Mr. Alexander: Does my hon. Friend accept that under the comprehensive system there are good schools and poor schools? Does he also accept that the publication of examination results, together with our policies on parental choice, can only benefit the good schools?

Dr Boyson: I agree entirely. There are good comprehensive schools, many of which will be glad to have their results known publicly. As my hon. Friend knows, I had the privilege to be the head of one such comprehensive school.

Mr. Flannery: Why is the Minister so coy about private schools? Why is it only maintained schools that

will have to publish their results, when the Minister knows that such schools vary according to area, no matter how good the teaching? Is it not a fact that all except two members of the Cabinet went to private schools and that it intends to help those schools at the expense of maintained schools?

Dr. Boyson: I never knew that I was coy, but perhaps compared with the hon. Gentleman I am. Private schools involved in the assisted places scheme will also have to publish their results. If the hon. Gentleman wishes to know what is happening in such schools, he should support the assisted places scheme instead of complaining about it.

School Materials (Parental Subscriptions)

Mr. Beith: asked the Secretary of State for Education and Science what evidence he has of schools issuing requests for parental subscriptions for essential school materials as a response to education cuts.

Mr. Mark Carlisle: Many schools now invite parents and others to make voluntary contributions to school funds. It has, however, long been the practice in many schools to ask pupils to provide, or pay for, materials for such activities as craft and cookery, where the pupil may take home the finished product.

Mr. Beith: Does not the Secretary of State recognise the legal obligation on education authorities to provide the basic essentials of education? Does he not in any case recognise that, if schools increasingly look to parents for a direct financial contribution, poorer parents will be frightened to send their children to the best schools?

Mr. Carlisle: As I have said before, the fact that parents may or may not contribute money towards schools in no way absolves a local education authority from its statutory duty under section 8 of the 1944 Act. However, that is no reason for attempting to discourage parents from making additional contributions. Some schools receive greater parental contributions than others, but there is no reason why we should discourage that.

Mr. Michael Spicer: With the pressure on resources, has my right hon. and learned Friend yet had time to consider whether he can do anything to counteract the effects of the High Court judgment against the county of Hereford and Worcester last week in respect of a parental contribution towards special music teaching?

Mr. Carlisle: I cannot add to what I said last Thursday. I have not yet had an opportunity to consider the full transcript of the judgment of Mr. Justice Forbes, which is clearly important.

Mr. Whitehead: When a headmaster writes to parents inviting them to pay for essential textbooks and states that the contributions are voluntary but that to be effective they must be made by all parents, is it not a levy and, as such, against the Act?

Mr. Carlisle: The law is clear. An authority cannot charge a fee for education. However, there is nothing under this Act or the local government legislation that prevents parents from providing money if they choose.

Mr. John Townend: In view of the continuous improvement in the teacher-pupil ratio, does my right hon. and learned Friend consider that in the areas where there is a shortage of resources for books and materials the local


authority should consider employing fewer teachers with an equivalent increase in expenditure on books and materials?

Mr. Carlisle: That is a matter for the individual local education authority. There has been less expenditure on books than on certain other aspects of education. In our planning we have assumed an increase in expenditure in that area.

Selective Education (Bristol)

Mr. Palmer: asked the Secretary of State for Education and Science what steps he is taking in consultation with the Avon education committee to bring about the end of selective education in the Bristol north central area by the combination of Cotham grammar school and Fairfield grammar school as one comprehensive school on a split site basis.

Dr. Boyson: None, Sir. It is for the Avon local education authority to decide whether it wishes to retain or change the organisation of secondary education in the Bristol north central area and, if necessary, to make proposals under section 12 of the Education Act 1980.

Mr. Palmer: Is the hon. Gentleman aware that Bristol was a pioneer in comprehensive education, that the anomaly has existed or a long time, that it is greatly disliked by many parents in the area and that the old Bristol education authority would have done away with it long ago? Should not Avon take action?

Dr. Boyson: Anomalies are part of a free society. The democratically elected education authority in Bristol is Avon. If the authority wished to change the system it could bring forward proposals. It clearly does not wish to do so.

Mr. Waldegrave: Is my hon. Friend aware that many people in Bristol are of the opinion that the only thing worse than the present situation would be a botched-up, split site, comprehensive school?

Dr. Boyson: I agree entirely. When I was privileged to visit my hon. Friend's constituency I consulted people in Bristol. It is clear that my hon. Friend knows exactly what is happening there.

Overseas Students

Mr. Nicholas Winterton: asked the Secretary of State for Education and Science how many students from overseas are currently studying at United Kingdom universities and polytechnics on first degree courses; and what was the figure for the same time in 1980.

Dr. Boyson: In October 1980 there were provisionally estimated to be 16,500 overseas students at undergraduate level studying at United Kingdom universities in the current education year. The corresponding figure for October 1979 was 17,500. In the polytechnic sector there were 9,900 such students in 1980–81, compared with 12,500 in the previous year.

Mr. Winterton: Will my hon. Friend accept that I am grateful to him for that detailed and satisfactory response? Does he agree that higher education in the United Kingdom gives good value and that that has long been found to be so by overseas students? Does he accept that the figures that he has read out indicate that the scaremongering of the Opposition was groundless?

Dr. Boyson: I, too, commend the value of British university and polytechnic education. It is among the best, if not the best, in the world. We are monitoring the number of overseas students coming here so that we are aware of changes from year to year.

Mr. Greville Janner: Is not the truth that wealthy students from overseas are able to come as before but that poor ones cannot?

Dr. Boyson: I am sure that the hon. and learned Gentleman noticed that last week the Foreign and Commonwealth Office increased from £34 million to £42 million the money allocated next year for overseas students on Commonwealth scholarships and fellowships. I am sure that the whole House will commend the increase.

Mr. Hill: Does my hon. Friend accept that there should be special exemptions to the policy? Is he aware that the island of Sri Lanka, which has been under Communist rule for many years, has finally broken free and is emerging as one of our dependencies? Is it not possible to make an exemption for an island that is abysmally poor through bad government in the past?

Dr. Boyson: Sri Lanka has its own universities. I was there for some time, and the Secretary of State was there last year. Also, if one makes special exceptions, there is then the question of Hong Kong, the dependencies, Cyprus, and so on. Through the Foreign and Commonwealth Office, we are helping all parts of the Commonwealth. The Department also has a scheme to help research scholars coming here, from wherever they come, who pay the home fees.

Mr. Ennals: Is the Under-Secretary of State aware that it is not just poor students who are suffering but poor countries? Is he aware that wherever one travels in the developing world, one of the things that is said first of all is how much students want to come to this country and how many are now being denied that opportunity, to the great disadvantage eventually of our own country and our own trade?

Dr. Boyson: I remind the right hon. Gentleman that the fall in numbers of undergraduate students at our universities this year as compared with last year is only 7 per cent. There were four applications for every place last year. I also remind the right hon. Gentleman that under the previous scheme, which continued under the Labour Government, there were indiscriminate subsidies to people coming here. Those students had to pay for their travel here, their hospitality in this country and the home fee, which amounted to £3,000 or £4,000 in any case, so it was not a subsidy to the poor.

Secondary Schools (Parental Assessment)

Mr. Colin Shepherd: asked the Secretary of State for Education and Science if he is satisfied that the information required to be published by secondary schools is sufficient to enable parents and parents-to-be to assess the performance of the schools.

Mr. Macfarlane: My right hon. and learned Friend's intention is to prescribe by regulations to be made under section 8 of the Education Act 1980 the minimum information which parents need when they consider which school they wish their child to attend. He is at present


considering the content of these regulations in the light of reactions to a consultative document issued last year, and hopes to make the regulations by about Easter.

Mr. Shepherd: Does my hon. Friend agree that the maximum amount of information is of essential importance to parents if they are to exercise their choice properly under the Education Act 1980? Will he make certain that the maximum possible amount of information is provided with regard to examination results and that it is presented in such a way as to enable proper comparisons to be made?

Mr. Macfarlane: I accept the point that my hon. Friend makes. We believe that the information that we are planning to make available will enable parents to make an informed choice of school and also contributes to the development of good and mutually supportive relationships between parents and schools. We hope that the regulations will make those points abundantly clear when they are produced by Easter.

Student Grants and Loans

Mr. Teddy Taylor: asked the Secretary of State for Education and Science if he will make a further statement on his review of student grants and loans.

Mr. Whitehead: asked the Secretary of State for Education and Science if he has now rejected proposals for loans rather than grants for the maintenance of first degree students.

Dr. Boyson: My right hon. and learned Friend hopes to bring his consideration of this matter to a conclusion in the near future.

Mr. Taylor: Before making a decision on loans, will the Minister take account of the costs which would be involved in establishing a structure for considering cases of hardship? Will he also consider the very substantial problems which would arise if graduates moved abroad to take up employment in the EEC or elsewhere?

Dr. Boyson: I take into consideration the points that have been made by my hon. Friend with regard both to hardship and to graduates moving abroad. Those matters form part of the many considerations that we are at present taking into account.

Mr. Whitehead: Will the Minister do a little more of the thinking aloud for which he is so famous and tell us how the proposals for loans that he is now considering would increase the take-up of university places by poorer students who currently receive the full mandatory grant?

Dr. Boyson: Compared with other countries in Europe, including countries such as Sweden which have a loan system, the percentage of working class children going to university is lower in this country. The present scheme, therefore, does not work. Clearly, this is a matter of concern to both sides of the House. Nobody can say that the present scheme is taking up poorer children now, because the percentage is dropping.

Sir Bernard Braine: Is there any truth in the assertion that the Department is contemplating treating students from the Isle of Man and the Channel Islands as foreign students and not even extending to them advantages to be enjoyed by students from the EEC? If so, is he aware that many hon. Members on both sides of the House would

regard such treatment of British youngsters who have long enjoyed traditional rights in this country as wrong? Will he look at this matter again?

Dr. Boyson: There are special arrangements on education funding between the mainland and the Isle of Man and the Channel Islands, but I am sure that we shall take note of what my hon. Friend has said. I share his sentiments on this matter.

Mr. Campbell-Savours: Despite the assurances that the Minister has given will he further support the provision for overseas students coming to the United Kingdom— [HON. MEMBERS:"Reading."] Yes, I will read the figures. Let us have them out.

Mr. Speaker: Order. I am sorry, but the hon. Gentleman has committed himself out of his own mouth. He must try to remember them.

Mr. Campbell-Savours: Is the Minister aware that applications by overseas students to Lancaster university fell by 68 per cent. in the current year—in accounting by 42 per cent. and in economics by 56 per cent.? Does not this fall in support for overseas students coming to the United Kingdom totally undermine the possibility of good relations between this country and other Governments in the future?

Dr. Boyson: I take the point made by the hon. Gentleman. But last year, in certain establishments such as the London School of Economics the numbers on some courses almost doubled, while at others the numbers fell. I shall be interested to find out at the end of the year whether the figures for other universities have risen and whether those for Lancaster have fallen.

Oral Answers to Questions — PRIME MINISTER

Engagements

Ql. Mr. William Shelton: asked the Prime Minister if she will list her official engagements for Tuesday 10 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Shelton: During her busy day, will my right hon. Friend turn her thoughts to Lambeth? Is she aware that NALGO—with, I fear, the tacit support of Lambeth council—is still totally blocking any action on council house sales? Does she agree that this is a denial of the rights of the tenants and citizens of Lambeth and indeed the tenants of all Socialist councils which are behaving in the same way, and a denial of the will of the electorate as expressed at the last general election?

The Prime Minister: I hope that all responsible trade union officials and all responsible political parties will combine to see that tenants are able to have their legal rights and to purchase their council houses. Any other action would be a denial of democracy.

Mr. Ashley: Will the Prime Minister explain why one of her Ministers, the Secretary of State for Social Services, refuses to intervene when local authorities neglect their


mandatory responsibilities to disabled people, while another of her Ministers, the Secretary of State for the Environment, insists upon intervening when local authorities do not sell council houses quickly enough? Is this politics by paradox or by prejudice?

The Prime Minister: I am sure that all my Ministers are right in their respective spheres.

Mr. Grieve: Will my right hon. Friend find time in a busy day to convey to those who have the privilege of serving in our security and monitoring services that the public expects of them a measure of loyalty, patriotism and devotion to duty and deplores the fact that, in pursuit of their sectional interests, some of them abandoned their posts yesterday?

The Prime Minister: Obviously I join my hon. and learned Friend in deploring the strike which took place yesterday, but I am sure that he will join me in congratulating the vast numbers of people who stayed at their posts and carried out their duties to the Government and to the people.

Mr. Hooley: When the Secretary of State for Defence said that Britain would contribute a company to the rapid deployment force, which company did the Government have in mind? Was it Lonrho, Vestey or what?

The Prime Minister: I suspect that the question is hardly worth answering—[Interruption.] If the hon. Gentleman looks at the full quotation, he will find that my right hon. Friend started with a company, and went on to a battalion and various other things. There seemed to be a rather rapid multiplication.

Mr. Hannam: asked the Prime Minister if she will list her offical engagements for Tuesday 10 March.

The Prime Minister: I refer my hon. Friend to the reply which I gave some moments ago.

Mr. Hannam: Apart from the current 7 per cent. pay offer, will my right hon. Friend confirm that over the past two years civil servants have received pay increases of over 48 per cent.? Is my right hon. Friend aware that in the country as a whole there is widespread condemnation of yesterday's strike, which was both unjustified and unjustifiable?

The Prime Minister: I confirm that the figure is about that which my hon. Friend has given. Of course, those who work in the public sector, particularly in the Civil Service, would point out that the rigid incomes policies of the Labour Government meant that they were grossly underpaid. That situation has now been remedied. I share my hon. Friend's view that at present there is no need for a strike on grounds of pay or conditions of service in the Civil Service.

Mr. loan Evans: Has the right hon. Lady read the Treasury and Civil Service Committee's report on monetarism? The chairman of the 1922 Committee is a prominent member of that Select Committee. Has the right hon. Lady also read the intemperate remarks made by the chairman of the Conservative Party, Lord Thorneycroft? When the right hon. Lady spoke to the Chancellor of the Exchequer at the weekend, to whom did she advise him to listen?

The Prime Minister: I suggest that the hon. Gentleman should read the transcript of the broadcast

made by my right Friend the Member for Taunton (Mr. du Cann) who is the chairman of that Select Committee. I am sure that the hon. Gentleman will find that it supported the Government admirably.

Mr. Heddle: Will my right hon. Friend take time today to read a report in the Daily Mirror to the effect that certain officials of the Confederation Of Health Service Employees, including the general secretary, are secretly operating a private medical scheme for its members? Does not that show confidence in the fact that the private medical system does have a part to play in the overall provision of health care in the country?

The Prime Minister: I saw that report. I should stress that in a free country, people should be able to use their own money to provide for their hospital or medical treatment. That will be ensured for as long as this Government continue in office.

Mr. Pavitt: As the Prime Minister is having meetings with her ministerial colleagues today, will she have a special session with the Secretary of State for the Environment? Is she aware that her declared policy of helping voluntary bodies is being sabotaged by the rate support grant? Money is required to prime the pump of voluntary bodies. Is she aware that voluntary servcies are being cut?

The Prime Minister: I cannot see my right hon. Friend because I regret to say that I believe he has flu. However, the Government give grants of about £86 million to voluntary bodies in order that they can carry out their activities. In my view, that is £86 million well spent.

Mr. Waldegrave: Does my right hon. Friend agree that when members of the First Division Association, who have immensely privileged jobs in terms of honour, security and pensions, take what they describe as"industrial action", standards in public life have reached a new all-time low?

The Prime Minister: Like my hon. Friend, I very much regret that that should have happened. I hope that the strike will not continue. Over the past two years, pay increases in the public sector have amounted to about 50 per cent. Therefore, the Government have properly looked after those who are expected to serve each and every Government in their honoured and distinguished capacity.

Mr. Edwin Wainwright: asked the Prime Minister if she will list her official engagements for Tuesday 10 March.

The Prime Minister: I refer the hon. Gentleman to the reply which I gave some moments ago.

Mr. Wainwright: In her quieter moments today, will the right hon. Lady consider the letter that has been sent by President Brezhnev? Does she believe that the strong words uttered by President Reagan and herself had some bearing on those peace proposals? Does the right hon. Lady believe that those peace proposals have been made through fear of the strength of the United States of America and of NATO, or because those statements had been made? Will the right hon. Lady bear in mind that it is time that the Governments of the world started to talk at greater length about multinational disarmament, in order to ensure that peace can be brought about throughout the world?

The Prime Minister: All Governments are entitled to make strong statements about the need to defend the way of life in which they believe, particularly when the potential aggressor spends so much more on defence, as a proportion of its gross national product, than this country. Yesterday, the Soviet ambassador came to see me and delivered a further letter. We had a quiet, courteous and businesslike meeting. He speaks very good English— [Interruption]—for which I am profoundly grateful. We shall, of course, consider his letter. As I made perfectly clear, this country is anxious and willing to consider reductions in the total level of armaments and to strike the balance at a lower level. However, we must be absolutely certain that those reductions will be properly monitored and verified. It would be an earnest of Soviet Russia's good intentions if it were to withdraw its troops from Afghanistan.

Mr. Stanbrook: Has my right hon. Friend yet had an opportunity to read the latest volume of the Crossman diaries? If so, does she agree that an apology is due to my right hon. Friend the Lord Privy Seal for the miscarriage of justice done to his organisation in connection with the libel case referred to in those diaries? Does she not agree that an explanation and an apology—

Mr. Speaker: The hon. Gentleman knows, as I have said before, that the Prime Minister can be questioned only about those matters for which she is responsible. I also said that about the previous Prime Minister.

Mr. Maxwell-Hyslop: Will my right hon. Friend take time today, to ask whether the Ministry of Agriculture, Fisheries and Food is taking adequate steps to prevent foot and mouth disease, which is now active in Brittany, from spreading to Britain, and in particular to the West Country?

The Prime Minister: I saw my right hon. Friend the Minister of Agriculture, Fisheries and Food, this morning, but I confess that we did not discuss that subject. As my hon. Friend knows, my right hon. Friend makes every effort to look after the farming community and does so extremely well.

Mr. Alton: Has the right hon. Lady had time to consider the seriousness of the implications of the speech made over the weekend by the Leader of the Opposition concerning the tragic deaths of 13 black people in South

London? Is she happy with the investigation that is being conducted? Is she prepared to have an independent inquiry into those tragic deaths?

The Prime Minister: It would be totally wrong to jump to any conclusions about a matter which is still under investigation. In this country one is still innocent until proved guilty. It would be quite wrong to add any inflammatory language to anything that is said. There are about 50 police officers investigating that case. They have taken about 600 statements. They are doing everything to find out the cause of the fire, and I am sure that they will continue to do so. That fire had particularly tragic effects.

Mr. Foot: May I say to the right hon. Lady and to the House that I certainly did not wish anything that I said on Sunday to prejudge in any way the investigation that is taking place. Most of those who heard what I said could not have come to that conclusion. However, if any did reach that conclusion, I am happy to apologise. I agree with the right hon. Lady that it is of the utmost importance that this investigation should be carried out speedily and fairly. That was my desire.

The Prime Minister: I am very grateful to the right hon. Gentleman.

Mr. Nicholas Winterton: Did my right hon. Friend watch the interesting Panorama programme last night in which Friedrich Hayek indicated that a constructive and meaningful reform of industrial relations was vital if the economic policies of this Government were to succeed? Will she assure the House that she will have discussions in the near future with her right hon. Friend the Secretary of State for Employment in order to outlaw the closed shop, which I believe is an evil and an infringement of personal freedom, to which my right hon. Friend has referred so often?

The Prime Minister: I did not see the broadcast, as I was in my constituency, but I am a great admirer of Professor Hayek. Some of his books are absolutely supreme—"The Constitution of Liberty" and the three volumes on"Law, Legislation and Liberty"—and would be well read by almost every hon. Member.
My right hon. Friend the Secretary of State for Employment has put out consultations in the Green Paper on the closed shop, and I hope that those such as my hon. Friend, who have particular views on the matter, will make their views known to my right hon. Friend.

WAY AND MEANS

Budget Statement

Mr. Deputy Speaker (Mr. Bernard Weatherill): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget Resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

INTRODUCTION

The Chancellor of the Exchequer (Sir Geoffrey Howe): The annual presentation of the Budget is rightly regarded as the principal economic act of Government. But every Chancellor—indeed, every Member of the House—very well understands that the economic well-being of the nation owes more, at the end of the day, to the spirit and vitality of its people than to any single act of Government. I do not seek, in saying that, in any sense to undervalue the proper role of Government, but simply to set it in perspective. What is the essential duty of Government is to provide responsible management of the financial framework within which the nation has to live. That duty must start from a sober and realistic assessment of the nation's economic condition. It is with that that I begin.
First, there is the fight against inflation. We have made real progress. Prices are now rising only about half as fast as they were last summer. In the last year we have had the most rapid fall in inflation of any major country. Living standards in the personal sector as a whole are estimated to have risen in 1980 by a further 2 per cent. There have been fewer industrial disputes than at any time in the last 40 years. In 1980 Britain's exports increased in value, and held up in volume, and we achieved a record current account surplus of £2¾ billion. Many British companies are clearly facing the challenge with much more success than might have been expected.
However, there are sharp contrasts. In 1980 total output in the United Kingdom fell by about 2½ per cent. and that of manufacturing industry by no less than 9 per cent. Interest rates have remained high. Many parts of industry have been extremely hard pressed. Although the latest figures suggest that the rise in unemployment may be slowing down, there are almost 1 million more people out of work than there were a year ago. For individuals, families, and sometimes for entire communities, this can mean real hardship. The Government share the nation's deep concern.

WORLD DEVELOPMENTS

But Britain is not alone in facing these problems. In the spring and summer of last year, output fell sharply in six out of seven of the major economies. Unemployment rose by about 3 million in the OECD countries during 1980. In the American motor industry alone, almost 200,000 workers lost their jobs. The average OECD inflation rate remains in double figures. This year the output of the European Community as a whole is not expected to show any improvement over 1980.

A major cause of this world-wide setback is the enormous rise in oil prices in the last two years. The oil-producing countries of OPEC last year collected about 150 billion dollars more in export receipts than they did in 1978. That huge increase, and the surpluses that it created, mean that the rest of the world has had less to spend on other goods and services. At the same time, Governments have had to act firmly to counter the inflationary spiral set in motion by higher oil prices.

Those are the main reasons why the OECD has estimated that the national product of the industrial countries this year will be at least 6 per cent. lower than it would have been without the latest oil price increases. That represents a very large enforced reduction in sales and output. It has inevitably meant a big jump in unemployment. Because we are a trading nation, the fact that we have our own oil cannot protect us from the slowdown in many of the markets to which we sell around the world.

THE UNITED KINGDOM ECONOMY

There are still many businesses in Britain that lead the world. But the obstacles to recovery are none the less greater here than in other countries. Many parts of our industry have long been less dynamic than theirs. Years of high inflation, low productivity and delayed change have made our economy especially vulnerable, and reduced its ability to compete in both home and overseas markets. And so we are suffering more than others.

Those firms which have lagged behind have often been encouraged to do so in the misguided belief that change can be postponed indefinitely. Eventually, the combined pressures of competition and recession have compelled long-overdue moves to tackle these deep-seated weaknesses. They have been essential to the creation or preservation of secure jobs for the longer term. But, of course, the immediate effect has been to add to unemployment. Thus, nearly 300,000 jobs have been lost in the motor industry, steel, textiles and shipbuilding over the past 18 months.

As a nation we have carried the process of weakening our own economy a long stage further in the three years before the recession started. In each of the last three pay rounds, earnings in manufacturing industry rose by over 14 per cent. while the underlying improvement in productivity has been little more than 1 per cent. British unit labour costs have risen more than twice as fast as those of our foreign competitors.

Industry has had to adapt to a second huge increase in the price of energy. The world oil price is now three times what it was three years ago. Because of that, the North Sea has had the consequence of contributing to the sharp rise in sterling since 1977. Various other factors have also influenced the position of sterling, including changes in the fortunes of other major economies. Although the


strong pound has conferred some benefit on British industry through cheaper imported materials, it has, of course, imposed real difficulty on businesses that sell against international competitors. That has been particularly true of those industries that were still seriously overmanned.

So, as consumers, we have benefited greatly from the strong pound and very often from large pay increases as well, while many companies have been hard pressed. Between 1977 and 1980, the real after-tax income of individuals rose by about one-sixth. But the real disposable income of industrial and commercial companies fell by one-quarter. And output rose by only 2 per cent. This contrast between the fortunes of individuals and businesses marks a striking imbalance. There is also a sharp difference—within the business sector itself—between the fortunes of the oil and banking sectors, on the one hand, and most manufacturing companies on the other.

In these circumstances, many manufacturing businesses have had to take drastic action in order to survive and they have sharply reduced the number of jobs that they were able to provide. Many factories had already gone a long way towards pricing themselves out of the market by earlier pay settlements. Many of those who secured big pay increases may have improved their own standard of living, but only at the cost of pushing their fellow workers out of a job.

Recently, however, there has been an increasingly constructive approach to these problems, at least in the private sector. The level of pay settlements has been falling significantly. Pay bargainers have begun to face up to the harsh truth that excessive pay is a major cause of unemployment. Most settlements in manufacturing since November have been below 10 per cent. That is in sharp contrast to the years that went before. Management and work force are at last joining together to tackle the problems of overmanning, restrictive practices, and out-of-date working methods. They understand that cutting unit labour costs is the way to become competitive again and to price themselves back into markets and jobs.

But the nationalised industries, many of them monopolies, are not subject to the same market disciplines as the private sector. They have often been slow to adapt. And when eventually they do adjust, the financial and social costs can be very heavy. But the cost of delaying change has often been even greater, in terms of markets lost and jobs destroyed. It is the need to make nationalised industries more responsive to market disciplines which lies behind the Government's vigorous programme to increase competition in, for example, transport and telecommunications, and wherever possible to return parts of the State-owned sector to private enterprise.

Nor have other parts of the public sector learnt these lessons at all quickly. Thus, the overall cost of the public sector has continued to grow in relation to the rest of the economy. Total spending programmes in 1980–81 are now expected to cost approaching £94 billion, compared with last year's Budget forecast of about £91½ billion. In addition, debt interest has cost £1 billion more than expected. The increase in the overall total would have been still greater had it not been for the notable success of my right hon. Friend the Prime Minister in negotiating refunds from the European Communities of some £600 million. The burden of public expenditure will be a recurrent theme in my speech.

BUDGET STRATEGY

It is against this background that I turn to the central objectives of my Budget.

Some have urged that I should abandon the battle against inflation as our top priority and look instead for ways of expanding the economy. If this were the way to sustained recovery for British Industry, and so to the creation of more long-term jobs, I should certainly be ready to consider a change of course, because the well-being of our people and the health of our economy are more important than any Government's commitment to a particular strategy.

But to change course now would be fatal to the whole counter-inflation strategy. Our problem in recent years has not been a lack of final demand. Since 1977, spending in the whole economy, in money terms, has risen by no less than 50 per cent. Most of the impact of that increase has been dissipated in higher prices. In so far as the volume of spending has increased, a large share of the extra has gone on imports. In the end, there has been very little effect on United Kingdom output.

Just boosting demand would do nothing to remedy that problem. Rather, it would risk throwing away the real achievements that we have secured, without winning any compensating gains. In the past, Governments have too often deprived themselves and the British people of the success that they deserved because they abandoned the policies when the going got rough—when the sacrifices, in fact, had largely been made, but before the long-term benefits had begun to arrive. It would, indeed be a tragedy to inflict on ourselves a further dose of crippling inflation just at the time when, with resolution, our industry can be helped to take advantage of the more stable conditions, which should follow the easing of the present recession.

I am, therefore, determined to sustain the firm action that is necessary to maintain our success in the battle against inflation. It is also essential this year to respond to the two imbalances in our economy that I have described: the imbalance between consumers and industry and the imbalance between the public and the private sectors. Moving towards a better balance must be the central purpose of this Budget.

THE MEDIUM-TERM FINANCIAL STRATEGY AND 1981–82 MONETARY TARGET

There is now world-wide recognition that inflation is the enemy of growth and employment. And it is just as widely recognised that sustained monetary restraint is necessary if inflation is to be kept permanently under control. Of course, there is not a rigid relationship between money and prices. Of course, there are other influences on inflation, particularly in the short run. We always made that absolutely clear. But monetary policy is of fundamental importance. These principles apply to this country just as much as to any other.

THE MEDIUM-TERM FINANCIAL STRATEGY

It is time for us to start thinking ahead to the advantages that can accompany a permanent reduction in inflation, for to live once again in a world that has banished the spectre of accelerating inflation must be our objective. We reaffirmed our commitment to that objective last year when we published the medium-term financial strategy. I am reaffirming it again today by taking the measures necessary to strengthen and carry forward that strategy.

I have no doubt that the House will expect me to spend a little time on monetary matters. As the recent report from the Treasury and Civil Service Select Committee has shown clearly, this is an absorbing area of policy.

Thanks to the tight financial conditions of the past 18 months, including the effects of the strong pound, we are well ahead in the battle against inflation. We have achieved that while reducing controls rather than by imposing them. But for a number of reasons related to the special circumstances of last year, the growth of sterling M3—the measure of money used to express the strategy—has been well outside the first year target range of 7–11 per cent. I said in November that I expected it to slow down in the new year. Recent figures, including the preliminary figures for banking February, published today, are fully consistent with that.

MONETARY GROWTH IN 1980–81

The first reason for rapid monetary growth over the year is the abolition of the so-called corset. That was long overdue. All that the corset achieved was to make the published figures artificially low. since its removal last summer those distortions have been reversed, and the figures have been artificially high. By their very nature, such distortions are impossible to measure accurately. They are likely to have been substantial. But purely statistical changes have no implications for future inflation. The distortions have now largely worked their way out of the system. In that respect, sterling M3 will from now on be a better measure.

Again, the growth of sterling M3 was increased last year by the special nature of the recession. Public borrowing increases in a recession, but that is normally offset by lower private sector borrowing. Over the past 12 months public borrowing has been exceptionally high. But on this occasion bank lending did not fall away as quickly as might have been expected.

Because of the exceptional imbalance between business and personal incomes, both sectors, for different reasons, have borrowed heavily. Faced with an unexpectedly severe recession and the consequences of previous pay increases, businesses borrowed to tide them over while they reduced costs. Many people, on the other hand, have

seen their living standards rise to an extent unusual in a recession, and have been willing and able to borrow as well. The combined effect of that borrowing has been an important expansionary influence on sterling M3.

At the same time, there has been a high level of private investment in financial assets. That can be seen as an attempt by the private sector to rebuild its holdings of such assets, whose purchasing power had been sharply eroded by inflation. It has included an increase in holdings of interest-bearing money. But to the extent that it merely involves returning towards a more normal level of financial assets it need not fuel inflation.

Other indicators also suggest that the underlying financial conditions have, as the Government intended, been tight. Our Green Paper on monetary control, published a year ago, stressed the need to watch a range of measures of monetary conditions. Over the past 18 months the narrower measures of money have not grown at all rapidly. The pound has certainly been higher than would be expected from the behaviour of the money supply. That external pressure has reinforced the monetary squeeze and contributed to the fall in inflation. And inflation has fallen so much relative to interest rates that the real cost of borrowing has risen significantly.

Financial behaviour should now revert to a more normal pattern. The private sector has been moderating its borrowing from the banks, and the exceptionally rapid build-up of personal sector liquidity should come to an end as the growth of prices and incomes continues to slow down.

THE MEDIUM-TERM STRATEGY AND THE TARGET FOR 1981–82

It is important to express the medium-term strategy in terms of a wide measure of money, because it has close links with public spending and borrowing. So I am maintaining continuity by keeping sterling M3 as the yardstick for medium-term policy. The aim remains to reduce monetary growth to 4–8 per cent. by 1983–84. The new target range for next year, based on the actual figure for sterling M3 in banking February, will be an annual rate of 6–10 per cent. over the 14 months to April 1982.

The special factors at work last year are unlikely to be repeated. In any event, they should have no adverse implications for future inflation. But we cannot be certain that they were the only causes of the rapid growth in the money supply. So it may be desirable to recover some of the past year's high monetary growth in the form of lower growth over the medium term. But the most important requirement is a lower growth of the broad measures of money in the years ahead.

However, the short-term response of sterling M3 to interest rate changes is particularly uncertain and the full effect can be spread over many months. The narrower measures, which we also monitor, include fewer interest-bearing types of money and are more sensitive to changes in interest rates. But because they are so sensitive they can overstate the effect of interest rate changes on underlying monetary conditions. Moreover, their relationship to other aspects of policy is less clear.

I am taking steps, therefore, to improve the information available about the narrower measures. Publication of figures for monetary base will begin later this month.


Arrangements for a new statistical series for the retail deposits of the banking system, M2, are also well advanced. That will be publishted later this year.

We shall continue to monitor Ml. In doing so, we shall take account of its normal tendency to grow quickly as nominal interest rates come down with inflation. For this reason we may now find Ml growing rather faster, for a time, than it did last year.

PUBLIC SECTOR BORROWING

I turn next to the public sector borrowing requirement, the PSBR. Some people, I know, are tempted to regard the PSBR as something mystical, of interest only to economists. How I wish that they were right. But, alas, that is not true. The size of public borrowing is, as it must be, a critically important constraint, for Governments are no different from individuals. The PSBR, in plain language, is broadly the difference between what the Government spend, or lend to others, and what they collect in revenue, mainly through taxation. It necessarily includes what the nationalised industries borrow. Most of that comes from the Government, and where they borrow from other sources the Government stand behind them. So the PSBR is the amount central and local government and the public corporations have to borrow. It is the experience of Governments around the world that if they try to borrow too much, either interest rates or inflation, or both, begin to soar.

Britain's experience tells the same story. If we are to stay on course for lower inflation and lower interest rates, we must borrow less. Public borrowing, as a proportion of national income, must be brought down. This is why the medium-term financial strategy envisages a downward path for borrowing, as well as for the growth of the money supply. These remain two essential prerequisites for a lasting grip on inflation.

Against that background, the House will understand my anxiety at the way in which borrowing has actually developed. For 1980–81, the year which is drawing to a close, the PSBR is now forecast to emerge at £13½ billion, or 6 per cent. of the gross domestic product. That compares with the 1980 Budget forecast of £8½ billion. The lion's share of the £5 billion excess in 1980–81 was accounted for by higher expenditure. There has also been a net shortfall of tax revenue of about £1 billion, with receipts from indirect taxes and North Sea oil below expectations—only partly offset by higher receipts from the other Inland Revenue taxes.

For the year now approaching, 1981–82, our published strategy suggested an illustrative PSBR of some 3 per cent. of the gross domestic product. Translated into today's prices that would be about £7½ billion. In 1981–82 output is expected to be lower, and unemployment higher, than envisaged a year ago. The effect of the recession on the PSBR is likely to be even greater this year. It is therefore clear that a £7½ billion PSBR for next year would be unduly restrictive.

Moreover, I must tell the House that this year's Budget-making exercise has started from the basis of a forecast for the PSBR in 1981–82 of no less than £14 billion. I am in no doubt that to begin the year with the intention of borrowing as much as £14 billion would be irresponsible in itself and unacceptable to the House.

We must consider what should be the objective for next year's PSBR I have already ruled out £7½billion as

unduly restrictive. Taking everything into account, I have concluded that it would be right to provide for a PSBR in 1981–82 of some £10½ billion, which is a little more than 4 per cent. of the gross domestic product. This is still a high figure, but I believe it to be consistent with the monetary target that I have just announced. I also believe it to be a sum that can be financed without placing undue strains upon the capital markets.

But, as the House will understand, if the figure is to be brought down to £ 10½ billion from £14 billion, some harsh decisions are inescapable. The figure of £14 billion which I have just quoted incorporates the spending plans for next year that have already been announced—but it is otherwise based on unchanged tax rates and unchanged allowances. It allows for the increases in national insurance contributions that I announced last November—which the House has now approved. That leaves a net sum of around £3½ billion to be secured in this Budget: £1 billion of that will come from the new North Sea taxation that I foreshadowed last November. I shall be outlining other proposals later in my speech.

These tax changes should enable us to achieve our monetary objectives without having to face intolerably high interest rates. But we are determined to maintain the monetary and fiscal framework necessary for the reduction and defeat of inflation—even at the cost of departing, for the time being, from our commitment to lower personal taxes. The tax increases that I am announcing today are a measure of that determination. Equally, they reflect the bill that we as a nation must meet if we are to pay for the high level of public spending that we have chosen to support. I will return to the detailed proposals shortly.

METHOD OF BORROWING AND MONETARY CONTROL

Meanwhile, it is necessary not only to reduce Government borrowing but to finance it in a non-inflationary way. By drawing more efficiently on possible sources of savings it should be possible to control the growth of sterling M3 more effectively.

NATIONAL SAVINGS

Imaginative use of national savings can help to reduce pressure on the capital markets. Thanks to the initiative announced last autumn we have already achieved our national savings target of £2 billion for 1980–81.

For 1981–82 we have set the still more ambitious target of £3 billion. New measures are needed for that. We therefore propose two important changes to the second issue of index-linked certificates or"granny" bonds. From the beginning of next month the age of eligibility for these certificates will be reduced from 60 to 50—[HON. MEMBERS:"Maggie bonds".] I am glad that the House is willing to join with me in recognising the declining age of grandmothers. From the beginning of next month the age of eligibility will be reduced from 60 to 50 and a minimum bonus of 4 per cent. will be provided for all holders, both new and existing.

A reduction in the interest rate on the national savings investment account from 1 May will be announced later this month. That will be compatible with keeping interest rates on national savings instruments competitive enough to achieve our target.

In October last year my right hon. Friend the Secretary of State for Energy announced plans for a bond which


would allow the public to share in the benefits of the nation's North Sea oil resources. The Government intend to issue such a bond later this year. It will be aimed at small savers and will be a non-marketable certificate, administered by the Department for National Savings. Its capital value will be fixed, but the return on the bond will be linked to the value of the British National Oil Corporation's North Sea oil.

MARKETABLE SECURITIES

We also propose an important extension of the structure of Government borrowing by introducing an indexed gilt-edged security. This will be sold to pension funds and to life insurance companies and friendly societies in respect of their United Kingdom pension business.

Restricting the right to buy this indexed gilt will help to avoid the risk of attracting unwanted inflows of foreign funds. It will give those institutions that are eligible a new choice between indexed and conventional securities. The Bank of England is announcing this afternoon details of an issue of long-dated indexed stock worth £1 billion.

This innovation demonstrates the confidence that we have in our strategy for bringing inflation down. It will also reduce uncertainty about future real rates of return, thus helping borrowers and lenders alike. Those are important advantages for monetary control. We will have more flexibility in the market place and thus greater assurance of meeting the Government's borrowing needs.

We are also considering the introduction, later in the year, of new short-term marketable Government securities.

SMOOTHING THE FLOW OF REVENUE

I am proposing some new measures which will help short-term monetary management by smoothing the uneven flow of tax revenue. The most important area is that of North Sea oil taxation, to which I shall come later. Other proposals will be described by my hon. and learned Friend the Minister of State later in this debate, if he is fortunate enough to catch your eye, Mr. Speaker.

MONETARY CONTROL

These initiatives will be accompanied by other improvements in monetary control. Following extensive consultations based on last year's Green Paper, I outlined last November some changes that were desirable in their own right and would be consistent with a gradual evolution to monetary base control. These will come into effect during the coming financial year.

The reserve asset ratio has complicated monetary control. The first step in phasing it out was made in January. In the next month or two, at the conclusion of talks now to be undertaken with the banks, the ratio will cease to be a minimum requirement. Thereafter it will be adapted to have a transitional role as a prudential norm round which there will be variation, until the detail of the new arrangements has been settled.

The Bank of England has already made some useful changes in its money market operations. In its dealings with the discount houses it now relies mainly on buying and selling bills. Direct lending to the market has been greatly reduced. The interest rate on this lending is also now generally somewhat above comparable market rates,

while the rates at which the Bank conducts its open market operations have become more flexible. In conducting its operations in bills the Bank no longer quotes rates for more than one month ahead. Instead, it responds to bids and offers. This has the great advantage of allowing the market a greater role in determining the structure of short-term interest rates.

Discussions are now to take place with the financial institutions about these and other changes, including the future of the cash ratio. When they are complete, the Bank will aim to keep very short-term interest rates within an unpublished band, and in due course suspend altogether the practice of having an announced MLR, which would by then have lost its operational significance.

Decisions about short-term interests rates will continue to take account of the whole range of monetary indicators referred to earlier and other factors that affect the significance of the numbers, especially the progress of inflation. Modest reductions in interest rates were made in the second half of last year. Progress in reducing inflation, strongly positive real interest rates, a noticeable slackening in the growth of sterling M3 in recent months, and a marked fall-off in bank lending point towards a further reduction in rates. The increases in taxation that I am proposing in the Budget will make it possible to have an immediate reduction. Accordingly, the Bank of England is today, with my approval, reducing its minimum lending rate by two percentage points.

PUBLIC EXPENDITURE

Further progress towards lower inflation and lower interest rates does not depend primarily on improvements in funding techniques or in managing the money markets, important though these are. The overriding need is for more effective restraint of public spending. In the last year public expenditure has put a severe strain on the budget. Much of the increased spending has been caused by the effects of the recession being worse than expected. There has been an increase of £¾ billion in spending on unemployment benefit and on special employment measures, notably the temporary short-time working scheme. On many central Government programmes the expected shortfall in expenditure has not happened, and so the total has been higher than expected.

The recession has also—inevitably—had an adverse effect on the financial situation of most nationalised industries. It has meant an increase in the total of these industries' external financing limits for 1980–81 of some £900 million, over half of which has been for the steel industry. Some of the nationalised industries are now taking steps to reduce the overmanning and inefficiency which have built up over the years. But that, too, can cost more money initially.

These, however, have not been the only sources of upward pressure. On defence there has been substantial overspending—to the tune of £260 million—over and above a cash limit that had already been increased by £200 million. Local authorities' total cash spending appears to have been a good deal higher than allowed in my last Budget—and the position would have been much worse without the firm action taken by my right hon. Friend the Secretary of State for the Environment.

Because of all these developments we have not been able, in the course of 1980–81, to secure the full 5 per cent. cut at which we were aiming in our predecessors' planned


volume of expenditure. We have nevertheless achieved a reduction of about 3½ per cent.—or £3½ billion. Moreover, since the Government came into office numbers employed in the Civil Service have fallen by 35,000, and by the equivalent of about 40,000 lull-time staff in local government.

THE COMING YEAR

In the coming year, some of the upward pressures on public sector spending are bound to remain with us. I have in mind, for example, last November's decision to spend more on industrial support and on special employment measures to ease the effects of recession. Next year the cost of special employment measures will be no less than £1 billion. This will make it possible to offer every unemployed school leaver a place on the youth opportunites programme by Christmas. And we hope to offer other 16 and 17-year-olds, unemployed for three months, places within a further three months. In all, 440,000 opportunities will be offered—twice as many as in 1979–80. In addition, the temporary short-time working compensation scheme is currently supporting nearly 700,000 people.

However, this need to spend more on some programmes cannot justify accepting the wrong fiscal balance. That is why we took the decisions that I announced last November to reduce most of the Government's other programmes by £1,400 million cash. Those substantial cuts will go a good deal of the way to offset the other increases that I have described. But they have not gone far enough to avoid the need for substantial increases in taxation.

It is worth recalling that this Government have not been alone in having to cut planned and actual public expenditure. Our predecessors had repeatedly to do the same. Such reductions are necessary if the burdens on the rest of the economy are not to become intolerable. They are essential to the fight against inflation. That has been the recent experience of almost every other industrial democracy. The economic conditions that call for lower public spending are a world-wide phenomenon.

Today's new public expenditure White Paper shows a planned volume of public expenditure next year that would be much the same as this year's expected outturn. Various developments since the White Paper went to print, including the withdrawal of the plans for accelerated pit closures, have made it prudent to increase the size of the contingency reserve. I shall also be announcing later in my speech additional expenditure to help with industrial fuel costs. Altogether, these will add about one-third of 1 per cent. to the volume of expenditure next year, 1981–82. The resultant planning total is more than 3 per cent. higher than we had intended. But despite the much larger claims of employment support and of social security it will still be nearly 5 per cent. less than our predecessors had planned.

Our decisions for the future are designed to ensure that the volume of spending falls after 1981–82. The public expenditure White Paper shows a planned fall of 4 per cent. by 1983–84. Whether we can spend even on that scale must depend on how far we can afford to do so. During the annual review later this year we shall be looking hard at the possibilty of further reductions in those plans.

The House will find that the sheer size of public spending becomes much easier to grasp if one thinks not just in terms of the so-called volume of spending but in terms of actual cash paid out. The difficulty of controlling it also becomes clearer.

Last year—1979–80—we spent on programmes £77 billion in cash. This year—1980–81—the corresponding figure will be nearly £94 billion. Next year—1981–82—we will spend about £104 billion, cash. If debt interest is included, the rise is even greater.

An important part of the rise in total expenditure between last year and this has been due to the increase in the public services pay bill resulting from the Clegg commission and similar catching-up exercises, many involving staged settlements. The Clegg awards and staged settlements alone accounted for an increase of £2½ billion between the two years.

We have had to make provision for those consequences of the previous Government's incomes policies. But the significance of those consequences and the extent of the problem that they present have still not been widely recognised or understood. The pay bill for the public services in 1980–81 of about £30 billion is about 25 per cent. higher than in the previous year. This is twice as fast an increase as in the pay bill of the private sector. Much of the overall cost of pay settlements in the private sector has been offset by a reduction in numbers of people employed, or in hours worked. So the cash cost of Government has been growing much faster than the cash income of the rest of the economy that has to support it.

The immediate lesson is simple, but vital. After the recent large increases it is now both fair and essential that public service pay should grow more slowly. Pay, after all, accounts for as much as 60 per cent. of the major public expenditure programmes, such as education and health. This is why it is so important to work out improved ways of settling public service pay. Any new system must take proper account of all the relevant factors; the balance of supply and demand for particular skills as well as comparisons with terms and conditions in outside employment and—inescapably—the limits of finance available. Due weight will also need to be given to the expectation and intention of a continuing decline in the rate of inflation.

Experience over a number of years shows clearly the need for a system for the control of public expenditure generally which displays the consequences of spending decisions as plainly as possible. The present system certainly does not do that. This year, as for many years past, the figures in our White Paper are expressed mainly in volume terms at"constant" prices. But there is something inherently unreal in trying to plan and measure things in terms of what is rightly described as"funny money". Goods are not bought and people are not paid in the money of last year or the year before. They are paid in cash.

When the community, acting through the Government, decides to buy goods and services, it has to pay in money of the day, just like any private individual. There is, of course, a case for planning in volume terms as well. There is a clear need to plan the number of hospitals or roads or frigates that we are aiming to have in future years. But there is great danger in planning in volume alone. For there is then an inevitable tendency to assume that a given quantity of goods or services will definitely be available,


however much their costs may have risen. For this reason, it is essential that the control and planning systems should focus much more closely on the money actually spent.

I am accordingly making some important changes in the control and planning of public expenditure. These changes cannot be a substitute for the hard political decisions that have always to be taken. But they will enable those decisions to be taken with a much clearer appreciation of what is involved. They will help to displace the automatic assumption that what was once planned can always be afforded.

We have decided to make a major shift in the planning and control of spending from volume to cash. The introduction of cash limits by the last Government paved the way for this change. We now need to go a great deal further down that road.

In the first instance we shall, from the coming year onwards, change the way in which we operate the contingency reserve. This will now be a cash control. Previously, only decisions that increased the volume of spending during the year were charged to the reserve. Next year the control will be extended so that decisions to increase cash limits—in respect of pay or prices as well as in respect of volume—will be treated as a charge on the reserve. The reserve will be set at £2½ billion cash—about 2½ per cent. of the total of programmes. This allows both for the wider coverage resulting from the switch to a cash basis and for the increased provision, which I have already mentioned, to allow for developments since the White Paper.

Even more fundamental is the change that we shall be making in the way we go about future annual reviews of public spending. In planning public spending for 1982–83 we shall, from the outset, conduct our examination and discussions in terms of the cash that will be available for that year. This will change the whole framework and spirit within which decisions are taken. In some ways, it will make things more difficult for those who have to manage spending programmes—harder, indeed, for the Government as a whole. Departments will be obliged from the outset to form a view as to what their money will buy. That is bound to be less easy than just deciding what they want and then simply looking forward to receiving all the money needed to pay for it.

This is precisely the same problem as that which every family in the land has to face in planning their own spending. They may have to adjust plans, according to the way costs move and according to the availability of finance. For them, the focus must always be on how much cash is actually going to be available. It is high time for public spending to be subjected to similar discipline. This change to taking decisions in terms of cash will make a major contribution to improving financial management and will do much to support our other efforts to increase cost consciousness and accountability throughout the public sector.

SOCIAL SECURITY

I turn now to my specific tax and spending proposals. Even in a lengthy speech they cannot all be covered in detail, and more information about a number of them will be found in a series of press notices issued by the Departments concerned, copies of which are available in the Vote Office.

I have stressed already the huge total of public expenditure. Far and away the biggest element within it is the social security programme. It accounts for more than one-quarter of the total. In the last decade it has grown very fast. Partly, this is because of the increasing number of beneficiaries and the replacement of child tax allowances by child benefit. But it also reflects real increases in rates of benefit. Thus, over the decade the retirement pension has gone up by about 30 per cent. in real terms. That is about twice as much as the increase in the national income as a whole.

The cash cost of the social security programme in 1981–82 comes to a staggering £27 billion. This is about £1,000 per year for every worker in the country. We cannot, therefore, avoid considering this programme as closely as any other.

I estimate that prices will rise by 10 per cent. in the year to next November. The increase in pensions and other benefits made in last year's uprating proved to be 1 per cent. more than required to keep pace with last years' inflation. This is because prices rose more slowly than expected between November 1979 and November 1980. State retirement pensions, public service pensions, and most other benefits, including supplementary, unemployment and sickness benefits will, therefore, be increased next November by about 9 per cent. This reflects the expected rise in prices and at the same time adjusts for the over-provision made last year. The increase in the benefits will be substantial. The retirement pension for a married couple will go up by £3·90, to £47·35 per week, and for a single person by £2·45, to £29·60 per week. Unemploment and sickness benefits will be increased to £36·40 and £22·50 per week respectively.

Full details of the November increases will be announced tomorrow by my right hon. Friend the Secretary of State for Social Services. We shall be giving further consideration to policy towards public service pensions in the light of the report of the Scott committee. I shall myself have something more to say about child benefit in a few moments.

THE DISABLED

There is one group to whom we should pay special attention this year, despite the economic constraints that we face. I refer to the disabled, for this is the International Year of Disabled People. My right hon. Friend the Secretary of State will be announcing tomorrow an increase in the mobility allowance. I shall mention some other measures now.

The special income tax allowance for the blind has stood at its present level since 1975. I propose to double it to £360. I hope that this will be of some help to blind people in tackling the very real problems they have to face.

Many representations have been made to me for relief from value added tax on all purchases made by charities. I have regretfully concluded that such relief would be impossible to administer fairly or economically and would, in any case, cost too much. However, I do propose


to extend existing value added tax reliefs for the disabled and the charities serving them. For example, the present zero rating for articles given to hospitals will, in future, cover ambulances and wheelchairs. The benefit of this zero rating will also be extended to institutions caring for the handicapped. Car adaptations for disabled drivers will also be relieved from VAT. The necessary Treasury order is being laid today.

I am also proposing changes that will widen the scope of the reliefs from capital taxation for trusts for the disabled. To encourage unemployed people to work for voluntary bodies, the amount that a person can earn without affecting unemployment benefit will be increased from 75p per day to £2 per day.

The total cost of these measures is relatively modest. But, if put alongside the tax reliefs that I announced last year in respect of covenanted gifts to charities, the overall amount is substantial. The House may like to be reminded that tax relief on covenants at the higher rates of tax becomes effective from 6 April this year at a revenue cost of £20 million. These reliefs should greatly improve the fund-raising ability of charities. I shall be arranging to publicise these reliefs, and the opportunities that they offer, much more widely.

There is one other matter to which I should refer. I announced last year that we planned to bring into tax the invalidity, sickness and other incapacity benefits. We had expected that this might be from April 1982. In part because of pressures on civil service staff numbers, we propose to postpone this. I confirm however, that when invalidity benefit comes into tax the 5 per cent. deduction made from the November 1980 uprating will be restored.

RAISING THE REVENUE: BUSINESSES

OIL COMPANIES

I come now to the range of measures that are necesary to raise the extra revenue for this year. First, the North Sea. In deciding on particular measures I have had to take into account recent developments and future prospects for North Sea oil and the implications that these have for Government revenues. In 1980 production in the North Sea, at 80 million tonnes of oil, was less than predicted—only four-fifths what had been expected two years before. The production difficulties experienced in the past year have led to a major revision of output levels over the next few years. My right hon. Friend the Secretary of State for Energy has just published reduced forecast ranges for North Sea production in the years to 1984.

While oil production is likely to be lower than once expected, oil prices are much higher. Increases since 1978 in the real price of oil have brought substantial benefits to the oil companies, which face a very different prospect from that when the present tax regime was introduced. Such has been the rise in the oil price in recent years that I believe that the Exchequer should properly look to this area for additional revenue beyond what will accrue from existing taxes. However, even after the measures that I am about to announce, the increase over the medium term in Government revenues from the North Sea will be smaller than was once expected.

In my statement last November I foreshadowed the measures that I had in mind for increasing the Government's share of these revenues while maintaining

incentives for further exploration and development. Consultations with the oil industry have taken place and I can now announce detailed proposals.

I intend to introduce a new tax—the supplementary petroleum duty—broadly as outlined last November. The new tax will be at a rate of 20 per cent. on the total value of oil and gas produced, after deduction of an allowance of 1 million tonnes a year for each field. It will be deductible in computing liability to petroleum revenue tax and corporation tax. In response to representations by the industry, gas supplied to the British Gas Corporation from earlier North Sea fields will be exempted, and there will be provision for the new tax to be refunded where fields do not fully recover their initial development expenditure.

The new tax will be payable in monthly instalments. This will make a useful contribution to achieving a smoother public sector cash flow through the year. I shall also invite the industry to consider with the Inland Revenue how a broadly similar pattern of payments may be introduced for PRT.

I also announced in November last year that the special reliefs devised for PRT were under review. I now have proposals to make involving some restriction of these reliefs. I hope that my hon. and learned Friend the Minister of State, Treasury will have the opportunity of covering them in more detail in the debate.

There are a number of other minor changes to improve the oil taxation regime—partly made in response to the industry's own views.

The new tax, together with changes to the PRT reliefs, will raise an extra £1 billion in 1981–82. There will be a substantial continuing yield in later years.

The oil companies have urged that my objectives of more revenue and a more efficient and economical pattern of tax relief could be better secured by a thoroughgoing reform of PRT, which would make it unnecessary to introduce a permanent new tax. Officials have over several months given exhaustive consideration to that possibility, but without success, and no other proposals that I could regard as satisfactory have been put forward from any other source. But I do not close my mind to the possibility that modified proposals producing a broadly similar yield might be forthcoming. I propose, therefore, that the new tax, SPD, should in the first instance have legislative effect only for the 18 months ending on 30 June 1982. That will allow ample time for further study and consultation before permanent arrangements are introduced in next year's Finance Bill.

BANKS

Apart from oil, one other business sector has largely been protected from the effects of the recession, and that is banking. Indeed, bank profits in recent years have increased sharply, both absolutely and by contrast with the experience of most other businesses. A substantial part of these profits is the direct consequence of high interest rates in recent years: this applies in particular to the so-called"endowment profit" on current accounts on which no interest is paid.

Recent levels of bank profits are partly, of course, a cyclical recovery from the low level to which they fell in the mid-1970s. Also, the banks have needed to make provision against the effects of inflation and to rebuild the


reserves needed to underpin the valuable support that they give to businesses in difficult times. That is why I took no action last year.

However, I undertook to keep developments under review. The past year has seen further high banking profits, probably at a level not very different from the record profits of 1979. Certainly the contrast with the sharply reduced profits of industrial companies is, if anything, more striking. In present difficult circumstances, I cannot avoid the conclusion that I should require the banks to make a special fiscal contribution.

This will take the form of a special once-for-all tax on deposits of banking businesses that are in operation today. The tax will be charged by reference to non-interest bearing sterling deposits in excess of £10 million, averaged over the final three months of 1980. The rate of tax will be 2½ per cent. It will not be deductible against corporation tax. I estimate that the clearing banks will be the source of about 90 per cent. of the revenue, but the tax will apply to banking businesses generally. Altogether, an estimated £400 million will be raised in three instalments over the second half of 1981–82. This revenue will make it possible for me to give some help to the rest of industry this year which otherwise I could not afford.

RAISING THE REVENUE: INDIRECT TAXES

Even so, for the reasons that I have already explained, it is necessary to look principally to the personal sector for the additional revenue needed. People in employment have in general had more money to spend. Extra tax will have to be levied on that expenditure.

I do not propose any increase in the 15 per cent. rate of VAT. As last year, most of the extra revenue needed must come from the Excise duties. Increases would be necessary again this year simply to keep the rates of duty in line with the general movement of prices. Even when that had been done, however, many of the duties would be lower in real terms than they used to be. For example, since April 1975 the beer duty has risen by only about half as much as prices generally. I am proposing to increase the Excise duties to produce, in total, about twice as much additional revenue as would be required to compensate for one year's inflation.

ALCOHOLIC DRINKS, TOBACCO, ETC.

First, the duties on alcoholic drinks and tobacco. From midnight tonight I propose to increase the duties on drinks by amounts which, incuding VAT, represent about 4p on the price of a typical pint of beer, 12p on a bottle of table wine, 25p on a bottle of sherry, and 60p on a bottle of spirits.

On tobacco, I propose from midnight on Friday to increase the duty by an amount which, including VAT, will represent 14p on a typical packet of 20 cigarettes.

There will be consequential increases for other alcoholic drinks and tobacco products but a little less for pipe tobacco, which is used particularly by pensioners. I estimate that the increase on alcoholic drinks will yield £500 million in 1981–82 and £515 million in a full year. The increases on tobacco will raise almost exactly the same.

The duties on matches and mechanical lighters, which have not been raised since 1949, will be increased substantially—to raise an extra £15 million a year.

ROAD FUEL DUTIES

Road fuel must also make a substantial contribution. The duties on petrol and derv will be increased from 6 pm tonight by the equivalent, including VAT, of 20p a gallon. These increases should yield an additional £910 million from petrol and £270 million from derv in 1981–82 and the same in a full year.

VEHICLE EXCISE DUTY

I propose to increase the vehicle excise duty on all vehicles by about 15 per cent. The annual duty on cars will thus increase by £10, to £70. As the duty on derv is being increased in line with that on petrol I do not propose any differential increase on heavy lorries. The VED increase should yield £225 million in 1981–82 and the same in a full year.

CAR TAX

Finally, I propose extending the car tax to motor cycles, scooters and mopeds. This tax is charged at 10 per cent. on the wholesale value and is in addition to VAT. There is no longer any reason why these machines should be treated any differently from motor cars. The change is estimated to raise about £10 million in 1981–82 and £15 million in a full year.

SUMMARY

In all, these changes to the indirect taxes should raise about £2,400 million in 1981–82 and about the same in a full year.

With the partial exception of the road fuel and vehicle excise duties, the increases fall on those products which are bought by private consumers. Had all these excise duties simply been increased in line with inflation this would have added one percentage point to the RPI. The increases that I propose could add up to a further point. This is the maximum impact effect on prices. But in the longer run, by reducing public borrowing they will help to bring inflation down and ensure that it stays down.

RAISING THE REVENUE—DIRECT PERSONAL TAXATION

I come now to income tax. Once again I must have the main priority in mind—the need to contain public borrowing so as to make it possible to secure lower interests rates and ease the conditions in which the trading sector of the economy has to operate.

Inflation raises the real burden of income tax. This is because allowances and rate bands are fixed in money terms. As the value of money falls so, too, does the value of these allowances and bands.

It was in order to counteract this effect that the House in 1977 carried a measure that required Governments to raise the tax allowances by each year's inflation unless Parliament explicitly decided to the contrary.

To implement this formula now would mean increasing allowances by about 15 per cent. In the circumstances of this year that simply is not possible. The incomes of most people have been rising in both money and real terms, but many companies have seen their profits virtually


disappear, with serious implications for jobs and investment. In these circumstances it will not be possible this year to make any increase in the income tax allowances or rate bands. As hon. Members will realise, the House will be asked to approve a resolution to this effect.

A Treasury order is also being made today, following the procedure laid down in the 1980 Finance Act, setting out what the increases would have been in the thresholds and allowances if indexation had been possible. The House will wish to know that full indexation of the allowances and bands would have reduced the full year yield of income tax by £2½ billion.

This decision has not been lightly taken, and I share the disappointment that everyone will feel. It enables us to avoid, as I am sure is right, the need for any change in the basic or other rates of income tax. And it enables me to tell the House, as I am glad to be able to do, that we propose that child benefit and one-parent family benefit will both be fully price-protected, in line with the forecast of inflation. Next November child benefit will, therefore, go up by 50p a week per child, to £5·25. The one-parent family benefit will go up by 3()p, to £3·30 per week.

FRINGE BENEFITS

At a time when the real burden of income tax has to be increased it is all the more important that it should be fairly shared.

The benefit of a company car is already subject to tax but the tax scales fall well short of the true value. The amounts assessed to tax are less than half the AA's estimate of the annual costs of running a car. Last year we prescribed an increase of 20 per cent. in the scales from this April—just about enough to keep them rising in line with the costs of motoring. I now propose that they should be increased by a further 20 per cent. in April 1982. For company cars that have little or no business use there is a higher schedule of taxation. I propose to raise the business mileage below which this charge applies from 1,000 to 2,500 miles a year, with effect from this April.

Last year I referred to the growing practice of employers providing free petrol and said that I should be bound to contemplate action if it continued to spread. This warning has largely been ignored. I propose, therefore, to take action that will ensure that tax is chargeable in all cases where petrol is provided for the private use of a higher-paid employee or director. The Inland Revenue will consult employers' organisations over the administrative implications of the various possible methods of achieving this.

Most people have to pay for their own travel to work, whether by rail or by road. Some people have their travel costs met by their employers. Most of these pay tax on that benefit. There is, however, one small but growing group—not more than one commuter in 10—who get their travel costs tax-free. When an employer contracts with a transport authority for the provision of a season ticket to his employee the benefit is not, under the present law, within the general liability to tax. This is a clear anomaly. And it is plainly right to bring this group into line with everyone else.

Similarly, a minority of employees are provided with credit cards, which they use to obtain a wide range of goods and services that are charged to the employer. The

employee may thus avoid paying tax on part of what is truly his income. This, too, is quite wrong. I shall ensure that all employees pay tax on benefits of this kind.

Following consultations that took place last year, I have decided for now to leave in place the earnings threshold below which the taxation of fringe benefits does not, in the main, apply. Company cars and other such benefits will therefore continue not to be taxed in the hands of those earning less than £8,500 a year. Consistently with this approach, I propose to remove the charge to tax on medical insurance premiums paid by employers for the benefit of their employees earning less than this amount.

One pre-war anti-avoidance measure needs to be brought up to date following the decision in the Vestey case. This has shown that, among other imperfections, the rules dealing with avoidance of tax by way of transfers of assets abroad do not affect an individual who benefits from such a transfer but did not make or procure it. I propose changes in these complex and technical rules, to take effect from today, which will ensure that the individual pays tax on any benefit he receives. I propose also to amend the rules governing the taxation of capital sums paid by trusts.

Mr. J. Grimond: Mr. J. Grimond (Orkney and Shetland) rose—

Sir Geoffrey Howe: Not even for the right hon. Gentleman do I wish to break the tradition of an uninterrupted Budget Statement.

HELPING BUSINESSES

So far I have been dealing almost entirely with a group of measures that will have the disagreeable but necessary effect of increasing the revenue.

In order to secure the reduction in interest rates most of that revenue must go to reducing the PSBR. But some can go, as it should, to lightening directly the tax burden on business and enterprise.

There is not enough for across-the-board measures. It is important to concentrate relief where it will be most effective. I cannot, for example, find room for a reduction in the national insurance surcharge, at a full year cost to the PSBR of £700 million for each percentage point. Nor would a general reduction in corporation tax be appropriate, since it would not help companies that are so hard pressed that they are making no profit. I therefore propose to bring help to business and to encourage enterprise in the following ways.

The first measure is one announced, subject to further consultation on the details, last November: the reform of the stock relief scheme.

This reform will tackle certain abuses of the old scheme that have attracted legitimate concern. It will also lift the threat of clawback—the withdrawal of tax relief when businesses reduce their stocks. This was jeopardising the financial position of industry in the current recession. It was, above all, this problem of clawback that made it essential for the details of a new scheme to be announced, as they were in our consultative document last November.

I have considered very carefully the representations that have since been made in response to my original proposals. As a result, I propose to make certain detailed changes, including improvements in the transitional arrangements.

In particular, I have considered very carefully the concern that has been expressed to me by many businesses


about how they would be affected by the proposed credit restriction—that is, the arrangement under which relief should be restricted to the extent that a business may finance its stocks by trade credit or other borrowings. I have sought to balance the case in principle for the credit restriction against the fact that the other changes that I am making will in themselves reduce the scope for abuse under the old stock relief scheme. In the light of the severe difficulties which many businesses are now facing. I have decided not to legislate for the credit restriction. This will be reviewed in the context of other possible changes in the promised corporation tax Green Paper.

These changes will increase the cost of the new scheme to the Exchequer. The fall in the rate of inflation would by itself have reduced that cost. But as a result of the changes I now propose, the cost in respect of profits earned in the present calendar year, 1981—tax on which will mostly be paid in 1982–83—will be £450 million. This includes the cost of dropping the credit restriction, of about £75 million in the first full year. Only a part year cost—about £180 million—will fall in 1981–82. There will be a continuing revenue cost for some time to come and equally a substantial benefit to industry.

I also propose a limited extension of consortium relief to enable consortium members to pass relief downwards to a consortium company.

ENERGY PRICES

Another area of concern to industry has been energy prices.

I recognise the strength of the representations put to me to bring the level of fuel oil duty in this country more closely into line with that of our major European competitors. I have carefully considered the case for doing so.

The direct benefits to industrial costs are obvious. But there are also other consequences, arising particularly from arrangements entered into some years ago for gas purchases. I understand that the overall effect of those arrangements would be to put up the cost of gas purchased by the British Gas Corporation and, with it, the United Kingdom's gas import bill.

We shall keep the position under review. But in present circumstances I had to conclude that the wider national interest would be best served by not reducing that duty, but keeping it at its present level.

I am, however, able to announce measures which will assist industry on energy prices. The National Economic Development Council last Wednesday discussed the report of its task force on energy prices. The report showed that, while prices for the vast majority of industrial customers in this country remain in line with Europe, a limited but important number of large users of electricity and gas pay more for supplies than competitors in Europe.

In these circumstances, the electricity supply industry in England and Wales will, in addition to the action it has already taken, introduce new flexibility into its pricing arrangements, providing further scope for large high load factor industrial consumers to reduce their electricity coats.

The British Gas Corporation has already relaxed its industrial pricing policy to help its industrial customers. In addition, the corporation will now hold renewal prices

for gas sold under contract to the present renewal levels until 1 December 1981. Furthermore, the normal quarterly price escalation arrangements for gas provided on a continuous basis will not be applied during this period. The action which is to be taken in this area by the Scottish electricity boards will be announced by the Scottish Office later today.

These moves will give direct benefit to British industry. Accordingly, I am increasing the external financing limits for the gas and electricity industries by some £120 million in 1981–82. That cost will add to the public expenditure total.

The NEDC task force also drew attention to industry's difficulties in the recession of finding the capital to convert equipment from oil to coal use. To help here we shall commit £50 million over the next two years for grants towards the cost incurred in converting from oil-fired boilers to coal. The expenditure will be offset, at least in part, by greater coal sales. Any net cost will be met from the contingency reserve.

CONSTRUCTION

DEVELOPMENT LAND TAX

The construction industry is particularly hard pressed and it is in any case sensible to remove unnecessary obstacles to development. We have identified three helpful changes to development land tax which will stimulate activity, and so employment, particularly this year and next.

First, under the present law, if industrial development is undertaken by the owner for his own use, tax is deferred until the property is sold or put to other use. I propose that for two years this relief should be extended to other types of development for the owner's use, including commercial and hotel development. If a development is begun by 1 April 1983 there will be no DLT for an owner to pay on any part intended for his own use until the property is sold or otherwise disposed of.

Secondly, where property is extended there will in future be no charge if the extension does not increase the size of the building by more than one-third. The current limit is one-tenth.

My third proposal will reduce the burden of DLT on builders who acquire land for residential development and will be of particular benefit where land is released by local authorities and others for building homes. The cost of these measures is put at up to £5 million in a full year but the benefit to the economy could be much greater.

INDUSTRIAL BUILDINGS ALLOWANCE

As I have said, I am concerned that businesses should continue to invest for the future. Our tax system already provides generous incentives for investment in new machinery. But modern machines will seldom yield their full potential if they are housed in obsolete and inefficient factories. I therefore propose to increase the initial allowance for expenditure incurred after today on the construction of new industrial buildings, from 50 per cent. to 75 per cent. The cost will rise to £25 million by 1984–85. This will benefit not only manufacturing but also employment in the construction industry.

CAPITAL TAXES

The measures I have just announced will in total be worth about £300 million next year. And the tax measures alone will be worth over £400 million in 1982–83.

But if we are to build a strong and vigorous economy, we must do more to encourage and reward the creation of new enterprises, new wealth and new jobs. I turn, therefore, to the subject of capital taxation, which bears especially heavily on the owners of small businesses.

CAPITAL TRANSFER TAX AND CAPITAL GAINS TAX

In a year in which we can give no income tax relief, I cannot make major changes in capital taxation. I do, however, propose to continue the process of making more sense of the structure of capital taxes.

First, there is capital transfer tax. One new concept introduced as a feature of that tax was the idea of cumulating gifts made at any time in a person's life. Some allowance was made for the earlier payment of tax on transfers during life than on death, but only at the bottom of the scales. As a result, people are deterred from transferring their property during their lifetime. This is undesirable. Business property, in particular, should be permitted to pass more freely from one generation to another.

I propose therefore to recast the lifetime scale. At the bottom the charge on gifts will remain half that on death; at the top it will become two-thirds. I also propose limiting cumulation to 10 years and extending the capital gains tax roll-over relief to gifts into trust, to avoid a double charge. I hope that, by encouraging gifts, the Exchequer will benefit as well as the taxpayer. I also propose to increase the annual exemption to £3,000.

Capital transfer tax is also holding back the supply of land for new entrants to the farming industry. Tax is not the only factor, of course. But it is important to maintain a proper balance between owner-occupied and let land, allowing for their different value. I have in mind the unequal treatment of let land. At present, no relief is normally given on let land. In future relief will be available at 20 per cent. Agricultural land not subject to a lease will continue to receive relief at 50 per cent. The difference in the rate of relief recognises the lower value that let land commands and the lower tax burden it attracts as a result. The facility to pay CTT by interest free instalments will be extended to let agricultural land and the limit of £25,000 will be removed.

Next, I turn to trusts. I am grateful to all who responded to our consultative paper. I propose to tackle some matters this year, but on discretionary trusts draft clauses will be prepared for further discussion and we shall legislate next year. Meanwhile, there will be a final extension of the transitional period to 31 March 1983, or 31 March 1984 where an application has to be made to a court.

I also propose dealing with certain avoidance devices which centre on the market value rule for capital gains tax purposes, and aligning the capital gains tax rules with the new income tax rules developed following the Vestey case.

The net affect of all these proposals in the capital tax field will be a cost of £5 million this coming year but a gain of £15 million in a full year—the saving from the anti-avoidance measures exceeding the cost of the reliefs I have proposed.

STAMP DUTIES

I intend to include one stamp duty provision in the Finance Bill which will help those buying council houses. This will ensure that stamp duty will be payable only on the discounted price that the buyer actually pays and not on some higher figure.

ENTERPRISE

Last year, I introduced a number of measures to help small firms. In addition to the major new initiative to establish enterprise zones, these included a venture capital scheme, improved tax relief for small workshops, and a reduction in the rate of corporation tax for small companies.

All these measures have been widely welcomed. The 11 proposed enterprise zones have stimulated intense interest among investors and the private sector has begun to respond even before the zones are formally established.

Meanwhile, provision of private finance for small factory units has grown rapidly. The continuing strong demand for small workshops shows the strength of the small business sector.

But we can and must do more to help existing small businesses to grow, and to encourage new businesses to start up. This remains an essential key to new jobs.

VALUE ADDED TAX

First, VAT. I propose that, as last year, the registration threshold should be increased in line with prices—on this occasion from £13,500 to £15,000. This change will take effect from midnight tonight.

SMALL COMPANIES CORPORATION TAX

Secondly, I propose to increase from £70,000 to £80,000 the limit up to which the lower 40 per cent. rate of corporation tax is payable by small companies. I also intend to respond to one of the long-standing complaints from small companies, which is the relatively high marginal rate of tax which they have to pay when profits exceed that limit. The limit at which the full corporation tax rate of 52 per cent. becomes payable will be raised from £130,000 to £200,000. This will make for a gentler progression from the small companies' rate to the full corporation tax rate. The cost of these changes will be £ 12 million in 1981–82 and £21 million in a full year.

INDUSTRIAL CO-OPERATIVES AND PARTNERSHIPS

Thirdly, new businesses depend on ready access to fresh capital. Last year I relaxed the conditions governing tax relief for interest on money borrowed to invest in close companies. That was good for small companies. I intend this year to relax the conditions for industrial co-operatives and partnerships.

PURCHASB OF OWN SHARES

Fourthly, as the House knows, the Government will shortly introduce new clauses in Committee on the Companies Bill, to enable companies to purchase their own shares. Corresponding changes are needed in the present tax structure to help with a number of problems arising in small and family businesses. I am, therefore, asking the Inland Revenue to issue a consultative document on this subject this summer, with a view to legislation in next year's Finance Bill.

VENTURE CAPITAL SCHEME

Fifthly, I intend to extend the venture capital scheme introduced last year. This scheme encourages investment in small businesses by allowing capital losses on shares in unquoted trading companies to be set off against income. At present, it is confined to investment by individuals. I propose to extend the scheme now to investment by companies, some of which may be able to provide funds for expanding small firms.

POSITIVE USE OF REDUNDANCY MONEY

Sixthly, we have looked at ways of encouraging people who are unemployed, particularly those who have just become redundant, to help themselves, and the economy, by setting up in business. Redundancy payments and other payments made on termination of employment are at present taxable if they exceed £10,000. I am raising that threshold to £25,000 with effect from 6 April. In addition, the rules for the taxation of these payments will be simplified.

Furthermore, we are looking at the suggestion that the existing social security rules act as a deterrent to initiative. We are considering whether they could be altered, or other arrangements made, so as to encourage people who have been declared redundant, or who have been unemployed for some time, to start their own new small business.

All these measures will be of significant help to small businesses. But I intend to go further and have two new measures to announce.

LOAN GUARANTEE SCHEME

First, as the House knows, I have been considering the introduction of a loan guarantee scheme. There are some people who, for one reason or another, have difficulty borrowing money to start or develop a business. They may, for example, not have the necessary collateral security. I am pleased to be able to tell the House that agreement in principle has been reached with the major clearing banks and the ICFC on the introduction of a pilot loan guarantee scheme.

The scheme will run for three years initially, subject to an overall maximum limit of £50 million to be lent in each year. Individual term loans of up to £75,000 will be available for periods of between two and seven years. Government guarantees will be available for 80 per cent. of each loan. The scheme will be administered by the Department of Industry. Further information will be given by my right hon. Friend the Secretary of State for Industry.

The scheme is intended to be self-financing. Lenders will make a full commercial charge for their loans, part as an interest payment to the lender, part as a guarantee premium payment to the Department of Industry. Receipts from premium payments will be designed to cover the cost of claims made under the guarantee provisions.

BUSINESS START-UP SCHEME

My second new proposal breaks entirely fresh ground.

One of the biggest problems faced by people thinking of starting their own business is the difficulty of attracting sufficient risk capital to finance it during its critical early years. The amounts of additional money needed can be modest—at least as compared with the sums in which the big financial institutions commonly deal. But in individual cases they can be crucial.

The individual private investor has for many years had little encouragement to help fill that gap in the capital market. I propose to change that. The private investor can often contribute not only risk capital but direct personal business experience. The opportunities are certainly there. What is needed is to make it more attractive and more rewarding for private investors to take advantage of them.

I am, therefore, introducing an entirely new tax incentive to attract individual investors to back new enterprises. It is designed for the outside or minority investor in certain new small trading companies, as distinct from the owner of the business, his close family and associates. I am calling it the business start-up scheme. Under the scheme an investor will be able to obtain relief against income tax on up to £10,000 invested in any one year. The relief will be given in addition to the range of tax reliefs already available to the company itself, provided the investment is maintained for at least five years.

The scheme will relate only to genuine new business enterprises of the kind I have in mind. There will be strict rules to ensure that it is not used for investment in financial or passive operations, or for tax avoidance.

I am introducing the new scheme in the first instance for a three-year period, beginning with the coming financial year 1981–82.

This business start-up scheme will be unique in not only this country but among our main trading competitors. It will be a striking new incentive to channel investment into small businesses.

BUSINESS OPPORTUNITIES PROGRAMME

These measures to encourage enterprise and risk-taking are essential if we are to replace the jobs that are disappearing elsewhere in the economy. There must be a healthy flow of new enterprises. We must be ready to set aside the resources to encourage them. They are the real future hope for absorbing and redirecting the people and resources at present squeezed out of employment by economic adjustment.

As I have said, this is the second Budget in which I have included measures to help and encourage small businesses. The measures I have just announced, together with those last year, constitute a formidable range of incentives. The tax system is now geared significantly in favour of enterprise, risk-taking and investment.

Much has also been done by this Government to ease the problems of small businesses in other ways—for example, by relaxing employment and planning rules. All this represents a complete change in the climate within which the small business operates. It is vital that these measures be widely known and that people be encouraged to take advantage of them.

The Government recognise the need to give a lead in that. We shall, therefore, be launching a business opportunities programme to publicise the help, advice and incentives available to small business. We shall be improving the advisory service available to small businesses in urban areas in England and to co-ordinate the advisory services provided by the Council for Small Industries in Rural Areas and the small firms service of the Department of Industry. The opportunities have been provided by this and earlier legislation and we must now do all that we can to see that they are taken advantage of.

CONCLUSION

This Budget has been designed to sustain the fight against inflation, and to help redress the balance of the economy in favour of business and industry. It is only by giving priority to those objectives that we can strengthen the basis for sustained economic advance.

We shall continue to pursue our strategy for the defeat of inflation with determination.—[Interruption.]

Mr. Deputy Speaker: Order. The Chancellor of the Exchequer must be allowed to complete his statement.

Sir Geoffrey Howe: That strategy will be fortified by the changes that I am proposing today. These changes will reinforce the progress that has already been made and for which the nation can take credit.
In the year ahead the burden of income tax and Excise duties has to rise in order to secure lower interest rates and thus improve the prospects for industry and employment.
The downturn in the present economic cycle has been unusually severe. But it should now be coming close to its end. When recovery does start, the country will be better fitted than for many years to take advantage of the new opportunities, for important lessons have been painfully learnt. A greater sense of realism has been restored.
So, as we look further ahead, we can reasonably expect lower inflation and, in due course, lower unemployment and a reversal of the upward trend in the burden of taxation.
My present proposals are designed to secure our steady progress in that direction, and I commend them to the House.

Mr. Deputy Speaker: Order. Under Standing Order No. 94, the first motion, entitled"Provisional Collection of Taxes", must be decided without debate.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,

That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

(a) Spirits (Motion No. 2).
(b) Beer (Motion No. 3).
(c) Wine (Motion No. 4)
(d) Made-wine (Motion No. 5).
(e) Cider (Motion No. 6).
(f) Tobacco products (Motion No. 7).
(g) Matches and mechanical lighters (Motion No. 8).
(h) Hydrocarbon oil etc. (Motion No. 10).
(i) Vehicles excise duty (Motion No 11).
(j) Value added tax: registration (Motion No. 13).—[Sir Geoffrey Howe.]

put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

Mr. Deputy Speaker: I shall now call the Chancellor of the Exchequer to move the motion entitled"Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will be then decided without debate.

Budget Resolutions and Economic Situation

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—


(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax;
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge in payable.—[Sir Geoffrey Howe.]

[Relevant European Community documents: No. 10444/80 and the annual report on the economic situation in the Community (1980) and the economic policy guidelines for 1981.]

Mr. Michael Foot: It is the custom of the House for the first speaker after the Chancellor of the Exchequer has delivered his Budget speech to offer congratulations to him on the manner in which he has delivered his speech, whatever may be the criticisms which may follow on the matter and on kindred questions. I am glad to follow that tradition.
I have been a Member of the House for a considerable number of years, together with the right hon. and learned Gentleman. On a number of occasions, I have heard him introducing various measures. We all know that he has high professional skills. He has a full capacity to make his case clear to the House. I am sure that he is still capable of doing so when he wishes. Therefore, when the right hon. and learned Gentleman lapses into opacity, obliquity or even direct obscurity, I am sure that he always does so on purpose. There may have been some passages in his speech when I thought that he treated his listeners to the range of objectivity and somnolence which he hoped to achieve, but I believe that all Chancellors of the Exchequer have had to resort to such means. That was all the more necessary for the right hon. and learned Gentleman in view of some of his previous speeches.
I cordially welcome some features of the right hon. and learned Gentleman's statement. I offer no satirical aside in doing so. We shall examine the detail of the closing of the Vestey loophole. I congratulate the right hon. and learned Gentleman on doing so. I hope that he had the full co-operation of Lord Thorneycroft in carrying forward that proposal. We recall that Lord Thorneycroft, at the time of the exposure of the loophole, seemed to take a rather different view of the matter.
We welcome the right hon. and learned Gentleman's proposals for the disabled, particularly as this is the International Year of Disabled People. We shall closely examine his proposals, but from what he seems to indicate, it is an advance which we welcome.
We listened carefully to what the right hon. and learned Gentleman said about child benefit. He has properly improved the position this year, although he has not made up for his failure in the previous year. Therefore, although


we welcome what he said on child benefit today, as far as it went, we still believe that the Government should have fully made up child benefit to the value it had when they assumed office.
With regard to the 2 per cent. reduction in the minimum lending rate, we welcome any reduction in it, but we would have preferred a larger reduction considerably earlier. Although we welcome it—I am sure that industry will welcome it—there was an anomaly in the way in which the right hon. and learned Gentleman introduced the matter, because he will be aware—and his new assistant at the Treasury will be aware—that I have always preferred the views of Mr. Samuel Brittan as expressed in the Financial Times. I admit that all matters are comparative, but occasionally I prefer his view. Mr. Brittan warned us about a Chancellor introducing a change in the MLR in his Budget. He said:
We face a possible dangerous misuse of the Budget speech to announce a several-step fall in MLR by a Chancellor who once claimed to believe that such things should be set by market forces. But apart from bolstering his personal vanity, the attempt to use interest rates to manipulate the exchange rate is, if made, likely to backfire badly.
On another occasion, Mr. Brittan said:
There is a very special circle of hell reserved for those who take it upon themselves to decide the level of interest or exchange rates. By playing so obviously with the idea of announcing a 2, 3 or 4 per cent. cut in MLR in his Budget speech, the Chancellor of the Exchequer is volunteering as a candidate for that destination.
I would not dream of using such language, but that is the sort of language which monetarists exchange among themselves. It is a pity that the right hon. and learned Gentleman did not take the advice to reduce the MLR before the Budget, because that would have been of benefit to those who have to pay their mortgages. It would have been a good way for the right hon. and learned Gentleman to proceed.
In the latter part of his speech, the right hon. and learned Gentleman referred to a general range of measures which supposedly would assist industry. We shall examine those measures most carefully. However, they add up to little compared with the massive and monstrous deflation of the economy which the Budget proposes. On top of the grievous injuries which the British economy has already suffered, what the right hon. and learned Gentleman proposes today is a catastrophe of the first order for the British economy and the British people. We shall do our best to fight it by every means in our power.
I should like to comment briefly on what the right hon. and learned Gentleman gave as the reason for the change that he is proposing—although he is not proposing the radical change that some of us would wish. All the figures and prognostications of the Government have been disproved, as the right hon. and learned Gentleman had the candour to acknowledge. He therefore had to advance reasons why that has occurred. He advanced the reason that has been popular in Government circles in recent days. He suggested that the change was due primarily to the scale of the international slump or recession. However, that does not explain the disasters that have been thrust upon this country and its people.
The latest EEC figures show that in the 12 months ending in January 1981 unemployment increased by 3·9 per cent. in Italy, by 13 per cent. in France, by 26 per cent. in Germany and by 64½ per cent. in the United Kingdom.

In the fourth quarter of last year industrial production generally was only 2·3 per cent. lower than a year earlier. In Britain the fall was 11 per cent., which, as The Guardian showed yesterday, takes account of the output of North Sea oil.
The right hon. and learned Gentleman tried to conceal the scale of the comparison. The drop in production in the United Kingdom and all the other aspects of our well being associated with it are unique. Last year only the United States also registered a drop in GDP. Every country in Western Europe save the United Kingdom increased its GDP. We have fallen behind practically every other comparable country. That is the background against which the Chancellor takes his action.
I am sorry to see the departure of the right hon. Member for Taunton (Mr. du Cann). The Prime Minister paid him glowing compliments a little earlier. Several of those who strongly supported monetarist doctrines appear now to have abandoned their belief or at any rate their conviction that the policy was correct. Some have not. Some even say that the problem is that the monetarist doctrines have not been applied. G K Chesterton stated that Christianity had not been tried and found wanting; it had been found difficult and not tried. That is what some say about monetarism.
We are not sure what position the Chancellor takes. He apparently still holds to the monetarist doctrines that he preached earlier. In some respects that was the most scarifying part of his speech. He suggested that he would pursue the same course. He stated that it would be fatal to change course now. [HON. MEMBERS:"Hear, hear."] It appears that the Chancellor has at least a few supporters on the Government Benches. I presume that he is asserting that the Government will continue with the policy of massive deflation, which has been their policy ever since they came to power on 3 May 1979.
The Budget of two years ago had a slightly different tone and there was a different feeling abroad on the Government Benches, but they soon buckled down to the old Tory deflationary policy. As the monetarist policies did not seem to be working sufficiently well in the terms in which they had been introduced, last autumn the Government brought forward a fresh bout of deflation. It was reckoned that the inflection on the economy was £3,000 million. They have done the same in this Budget. We did not get from the Chancellor an exact account of what it was to be. Indeed, he gave no figure for his estimates for employment and unemployment. In a Budget of this nature he should have done. He is embarking once again on deflation on a massive scale. Not only the general budgetary estimate, but many of the individual measures that he has introduced—in particular the 20p tax on petrol—will inflict serious injury on the economy and make it infinitely more difficult to embark on any process of recovery.
Let us consider what the right hon. and learned Gentleman said about the burden of tax, and let us not forget that before today's announcements the Government's position was—although they rarely admitted it—that the burden of tax on individuals, direct and indirect, was higher than when they came to office in 1979. That is before today's Budget. What they have done today is sharp practice on a scale that no one expected.
I presume that the Financial Secretary to the Treasury has offered his resignation. If he has, there is no conceivable reason why it should not be accepted. The


direct taxation figures are very important indeed to the vast majority of tax payers. The failure of the Government to include the implications of the Rooker-Wise-Lawson amendment means an extra tax burden of £99 a year for a married couple, £63 for a single person and £132 for an elderly married couple. That is the consequence of the Government's failure to carry out their obligations and manifesto commitments. Tax thresholds are now lower than when the Conservative Government came to office, despite the fact that at the general election the Tory Party gave a direct promise that by the raising of tax thresholds the low paid would be let out of the tax net altogether. The manifesto stated how a Tory Government would tackle the matter and gave the reasons why.
It is scandalous that the Chancellor has not proceeded with the measure today. Only a year ago in his Budget Statement he tried to explain why it was conceivably not necessary for him to go ahead with the full increases in personal allowances last year. He stated:
At first sight that would suggest increases in the personal allowances which fall some way short of the rise in prices during 1979, but this would have a number of undesirable effects.
These undesirable effects will follow from the right hon. and learned Gentleman's policy today.
It would lower the starting point of income tax in real terms, compared with a year ago. It would increase the number of taxpayers. It would narrow the gap between tax thresholds and the main social security benefits, and it would impose particularly heavy burdens on those with the smallest incomes. All those effects would be most undesirable."—[Official Report, 26 March 1980; Vol. 980, c. 1474.]
All those effects have been introduced or sustained by the Chancellor failing to take action today.
When we come to the Committee stage of the Bill, I trust that all those who voted for the Rooker-Wise-Lawson amendment will vote for the maintenance of its principle, and that there will be restoration for those who are having the extra tax burden imposed on them. It is a matter of grave importance to the House and to the relationship between the House and the country.
The Opposition and, I believe, the country as a whole, are primarily concerned about the Budget, not only because of the tax rates which will be imposed. I have barely touched upon the range of increased indirect taxation that will impose its burden upon people. Overwhelmingly, the greatest issue facing the country is what is to happen to the level of unemployment. Both the Government and the Chancellor propose that we continue along the same course on which we were embarked. That means that there will be a serious increase in the level of unemployment that our people will have to encounter and overcome in the coming months and, indeed, years.
The Chancellor of the Exchequer has said that he will continue on the same course. That means the continuance of the appalling production figures that this country has endured throughout this period. Last year, GDP fell by 6.8 per cent., the index of industrial production by 13.2 per cent., the index of manufacturing production by 17.2 per cent., capital investment in all industries by 2.6 per cent. and in manufacturing by 3.6 per cent., investment in manufacturing by 12.6 per cent, and construction industry output by 9.2 per cent. Those figures add up to the massive unemployment that the country has had thrust upon it throughout this period.
The CBI put forward proposals for the right hon. and learned Gentleman to consider which at any rate would have avoided a fresh bout of deflation. The House and

indeed the country should take note of what the CBI said about unemployment. These are the prophecies, not of the Labour Party, but of the CBI itself. The CBI calculates that if all the proposals outlined in the CBI plan were carried through—and certainly the Government have not come near to accepting any more than a few trifles from among them—by 1984 it might be possible to get the unemployment figures down to what they are today. The unemployment figures today are already record figures for this century.
The right hon. and learned Gentleman had to point out in his speech that huge totals must be added to the figure of 2½ million unemployed. There are 700,000 people working short time, sustained by the various schemes that have been introduced. There are hosts of other figures to be added. I hate to make prophecies about unemployment rising above 3 million, and I believe that one should be careful about doing so, but that is what the CBI has said.
This Budget will produce a total of more than 3 million unemployed in this country. It is a Budget of no hope for the people of this country.
All hope abandon, ye who enter here
is the inscription to be written above the monetarist Inferno in which the Government still believe. There is no hope for the one million people who have joined the ranks of the unemployed in the past year. There is no hope for the further half million who will join the queue in the coming year, and in years to come. There is no hope for the vast majority of people coming out of the youth schemes. Certainly, they are good schemes, but the people in them still have to find jobs at the end. There is no hope for the overwhelming majority of people who will have to bear a much heavier burden as a result of this Budget.
It is a no-hope Budget, introduced by a no-hope Chancellor. It is a Budget which can only inflict the most serious injury on our country as a whole in years to come. It will inflict serious injury upon individuals and their families and on communities in the coming weeks and months, and longer-term injury on our country. It results from a combination of the primitive morals of the monetarists and the practical incompetence of the broken-backed Cabinet that we see arrayed before us today.
How long will this country have to endure the combination of injury and insult to which we have been subjected from the Treasury Bench? How long will this continue? That is the question which echoes up and down this country. The sooner the electorate has the chance to finish this Government, the better for all concerned.

Mr. J. Grimond: Fifteen or 20 years ago, the Budget was considered to be the main instrument of economic policy in the Government's hands. Those days have departed. We do not now hear of demand management or fine tuning. The Budget now is a desperate attempt by the Government to cover at least a part of their own annual expenditure.
If that is how the Budget is to be viewed, I wish to make one point. Great importance is now attached to the public sector borrowing requirement. But that includes not only borrowing by the Government for unproductive purposes but also borrowing by the nationalised industries. If borrowing by the nationalised industries is for genuine investment, there is no reason why it should not be treated as such and taken out of the public sector borrowing requirement. I am sure that the real fear in the


Government's mind is that it is not genuine investment but that it is largely wasted. If that is so, the Government should turn their attention to the running of the nationalised industries. In so far as it is genuine investment for productive purposes which earns a profit, however, there is no conceivable reason for one to be ashamed of it.
It has been said that the Government are not changing course, but in one respect they are changing course very rapidly. They promised continuing reductions in taxation. Apart from anything else, they are raising income tax levels this year by about 3p. There is no further reduction in taxation, so they have certainly changed course on that. However, it is not my business to deploy the main Liberal case on the Budget. That will be for my right hon. Friend the Leader of the Liberal Party tomorrow.
I wish to concentrate upon two aspects. First, there is the question of oil and petrol. I believe that the Government's policy on North Sea oil is disastrous. There is a strong case for issuing shares to the public, as has been suggested by Mr. Samuel Brittan. There is also a strong case for putting this income to investment. But there is no case for treating it largely as revenue when it should be treated as capital and allowing it to increase the value of the pound and provide no benefit to the economy. Today, we have again heard that the price of petrol is to rise 20p per gallon. This will be killing for agriculture. Already, farmers all over the country are complaining bitterly that their costs have far outstripped the prices that they obtain. Agricultural prices are falling. It will also be a further grave handicap on industry. In areas such as Orkney and Shetland, which I represent, the Isle of Wight, and other islands off the coast, where petrol is already l0p per gallon dearer than it is in London, this will be a further blow to the whole rural community. This continual raising of the tax on oil or petrol, regardless of its effect on industry and agriculture, is quite disastrous. If any company were to treat the oil revenues from the North Sea as capital, I believe that it would land up in the Old Bailey.
I turn to the organisation of industry. I am extremely doubtful about the effects of Budgets. I have now listened to about 30 Budget Statements. Indeed, one wonders why they are held annually in the spring, unless it is some hangover from long-ago days when we were an agricultural community. The Chancellor usually tells us that he has mapped out the course ahead, but in the autumn we are told that the whole thing must be washed out and something quite different done. What is certain is that this country's prosperity depends upon the efficiency of its industry, and that depends upon the structure of industry and the good will and productivity of those who work in it.
With regard to helping small businesses, the main new step in the Budget is the business start-up scheme. I welcome that. However, am I right in thinking that it is only tax relief on new businesses? For instance, it will not help those who wish to expand or take over existing business; nor will it provide any capital for new businesses. There is a great need in this country for a source by which people's savings can be channelled into productive industry.
At present, the great bulk of savings go into the savings banks or the building societies. The great bulk of those savings are taken out from the regions, where they are

accumulated, and dealt with centrally in London. I believe that the whole banking system is becoming far too centralised. We need some form of development bank—I do not mind whether it is set up by private enterprise or by Government—which will have its roots in the regions and which will channel regional savings into industry in those regions.
The Prime Minister has emphasised that she is interested in seeing that the maximum amount of redundancy payment money is invested in new businesses. However, there is nothing in the Chancellor's proposals to encourage that. There is nothing to encourage those receiving redundancy payments to join together to form co-operatives. I have taken some interest in this matter and have visited Corby and other places. There is a considerable willingness among people to engage in that type of enterprise. However, they lack knowledge about it. They do not know what might be possible, and they are ignorant of the legal traps into which they may fall.

Dr. Alan Glyn: I am not sure whether I heard the Chancellor aright, but surely the pilot loan scheme and the business starter scheme, combined with the ability to use redundancy money, will enable people who leave employment to start up businesses. Surely that is the whole object of what my right hon. and learned Friend said.

Mr. Grimond: I do not deny that something has been done, but I am talking about a particular type of business. I am referring to the setting up of new businesses by people who have been declared redundant, who have received redundancy pay and who want to work together. There is a great deal still to be done in that regard.
In the next year or so, when their redundancy pay begins to run down, those people will find that if they have invested in excess of £2,000 their level of social security will fall. It will take at least a year or more for any of those people to set up new businesses, but they will then be caught by a fall in their social security. The Government should make it possible for people who are investing to be able to draw on social security for a longer period so that together they may have some chance of setting up a co-operative or other forms of small business.
At present, there is a clear and unfair difference between those who set up a partnership and those who want to start up a small business of the sort that I have outlined. In effect, the former are allowed to pay interest on any shares they buy out of pre-tax income, but that does not apply to the latter.
I also draw the attention of the Government to the progress of the Companies Bill in another place. In particular, I should like them to look at the speech of Viscount Caldecote, the chairman of the ICFC. The Chancellor said that the Government had been in touch with the ICFC. I hope that they will pay attention to Lord Caldecote's remarks. He commended what he called"management buy-outs"—I am sure that he is quite right—and particularly approved of the Government's proposal to allow these businesses to buy back their own shares. He also coined a new phrase,"a company-owning democracy". That is something to which we should pay considerable attention.
I am anxious to encourage not only pure co-operatives but also the wider investment of redundancy payments and, indeed, people's ordinary savings in all types of


industry and enterprise within their own regions and in their native places. I believe that Viscount Caldecote, supported by Lord Seebohm, his predecessor at the ICFC, intends to move certain amendments to the Companies Bill aimed at encouraging that type of enterprise. I very much hope that the Government will respond to that. I also hope that they will be receptive to parallel amendments to the Finance Bill in order to encourage this type of development and to lessen some of the tax burdens and other difficulties which in spite of their measures—I admit that they have introduced some measures to assist in that direction—gravely hamper those who want to strike out on their own. The position of many small businesses is gravely hampered, both by the legal complexities of company laws and also by the weight of taxation.

Mr. John Loveridge: It is an honour to follow the right hon. Member for Orkney and Shetland (Mr. Grimond). I know that he will forgive me if I comment not on his observations but rather on those of the Chancellor of the Exchequer.
All of us appreciate the difficulties and constraints placed upon the Chancellor of the Exchequer by worldwide conditions. We cannot immediately form a full judgment about the measures that have been announced. That will take time. Some of us will be pleased, and others less so. That is inevitable with any Budget. However, it gave me particular pleasure to learn that three aspects on which the Conservative Party small businesses committee—of which I have the honour to be chairman—has been pressing the Government have been brought forward in this Budget: first, a new loan guarantee scheme to help small businesses to start up and to expand; secondly, new investment measures to encourage savers to put their savings into small firms rather than direct them into pension funds and insurance; and thirdly, improved measures for the relief of capital taxation, which has proved such a discouragement to expansion. I shall return to those three points later.
This is a tough Budget. It had to be. I have looked up one of my old speeches and I see that I then forecast:
Our debts abroad could grow to much more than £10,000 million before the North Sea oil flows in."—[Official Report, 29 January 1974; Vol. 868, c. 302].
I see from an answer given by the Financial Secretary on 10 February 1981 that our official debts abroad increased between April 1974 and May 1979 by $17·2 million, plus interest at $6·4 million. Therefore, it will be seen that the estimate that I made in January 1974, as the chill of the first oil price increase broke upon us, was not far out.
That crisis and successive crises that resulted from increased oil prices have lain at the heart of the difficulty of every Chancellor of the Exchequer and, indeed, of the difficulties of the nation as a whole since then. In January 1974 I also noted that there had been an increase in world liquidity in the previous two years that amounted to 62 per cent., and that that presaged inflation in the Western world for a long time to come. The Government are to be congratulated on lowering the rate of inflation, after the bout of inflationary rises that resulted from the pre-election boom. Given the 2 per cent. reduction in the minimum lending rate, the pound will probably fall a little. However, the effect of that drop may have already been largely discounted on the markets. We should never forget that over a long period of time this country has shown a

marginal propensity for importing more than it exports. Therefore, the Government should keep an eye on the pound.
Although our exporters would like a lower pound, we must ensure that we do not run into further constraints on expansion, which could arise from balance of payments difficulties. Given the benefit of our oil, however, that probably will not happen Some of us will be sorry that more help has not been given over energy prices. We all know that in America the use of oil is more than double that found per capita in this country. The United States of America benefits from cheaper prices. As long as that situation continues, there will be a strain on the economies of the Western world due to its imports. On 1978 figures, we use 3·78 tons of oil equivalent per capita. In the United States of America 8·5 tons per capita are used. Japan is an example of how much can be done to save energy. Despite its vast output, only 3·1 tons per capita are used.
I turn to the expansion of the money supply. I wonder whether the Government have not been unduly anxious about it. However, I am glad that in recent weeks—and, indeed, today—the Government seem to have taken an easier attitude towards the growth of M3. As stocks fall, it is natural that they should be turned into cash. M3 is a broad measure. The Chancellor of the Exchequer reminded us of the effects of removing the corset.
I should like the House to consider the figures for the growth of the gross national product from the end of 1969 to the end of 1979. At the end of 1969 the gross national product was £40·1 billion. At the end of 1979 the amount had grown to £162·1 billion, which is slightly more than a fourfold increase.
Let us now compare the growth of M3 over that same decade. At the end of 1969 the figure for M3 was £16,132 million. At the end of 1979 it was £58,645 million. That is substantially less than the fourfold increase in the gross national product. Although there is no need for an exact relationship between the two, common sense suggests that at the end of that decade there must have been room for a substantial catching up in M3 in comparison with the growth that had taken place during that decade. Indeed, I refer to thousands of millions of pounds of room for M3 to catch up.
I turn now to the figure for our debts. The Chancellor of the Exchequer forecast a target of about £10·5 billion for the public sector borrowing requirement for the coming year. Some of us may feel that that target will be hard to meet and that it should be eased. Some—including myself—find it strange that, when our defence needs are growing, when dockyards are idle, when steelworks are empty and when engineers are unemployed, we are not using more fully the productive capacity to create new arms for our services, such as a new Navy. Not only would the country become safer from aggression, but those industries would be lifted out of the doldrums and greater employment would be provided.
Unfortunately, many men have had to leave the steel industry. However, 15,000 new jobs will be created under the arrangements for the expansion of small businesses in the steel-producing areas. Governments should not forget that without micro-economic success there are no macroeconomics.
I was cheered to hear some of the measures that my right hon. and learned Friend proposed. I refer first to the loan guarantee scheme. Those of us who nagged away are cheered to find that our words have been effective and that


the Chancellor of the Exchequer has brought such a scheme to fruition. However, I was concerned to note the limitations that have been placed on it. First, it is only a provisional measure for three years. Secondly, there is to be a limit of £50 million on lending. Thirdly, there is to be a limit of £75,000 in loans to any one firm.
The Government seem to have adopted our scheme in most respects, including the amount to be financed totally by the banks and the amount to be underwritten—on a self-financing basis—by the Government. The ratio of 80 to 20 per cent. seems reasonable. However, when we put forward our scheme we believed that rapidly expanding firms that were already off the ground and that did not have assets needed money to sustain their growth and cash flows. Banks would not lend to them because they did not have the assets to pledge to cover any rapid expansion.
The limit of £75,000 will restrict access to smaller units, many of which can already obtain satisfactory servicing from the banks. I was also concerned to hear that the scheme would be worked through the Department of Industry. We had hoped that the banks would carry out a major part of the work.

Mr. D. N. Campbell-Savours: It is the banks.

The Under-Secretary of State for Industry (Mr. John MacGregor): It is the banks.

Mr. Loveridge: I am glad to have that assurance from the Minister. The proposal represents a bold, new and good idea. It will succeed. However, we should have liked it to be on a much larger scale.
Secondly, on the question of private investment in industry, the relief of up to £10,000 invested will be a great encouragement for those in high salaried jobs who are making substantial savings to put those savings and back them with their judgment into small businesses. But for small businesses that need capital £10,000 is not a lot. They will have to develop a new market to find the people who are willing to invest in them. I hope that the Government will be able to help in setting up such arrangements so that those who have money to invest can be brought nearer to those who need the money.
Thirdly, there were the welcome provisions on capital taxation. They are good. They go a long way to relieve the difficulties, but again I fear that for many firms they do not go far enough.
On the whole question of investment, that being what industry badly needs at present, I was a little concerned to note that banks would be charged a tax on their excess profits to the tune of about £400 million. I should have preferred that amount to be turned towards the small and medium business sectors. None the less, it is right that banks should not make a windfall advantage out of national considerations that have increased interest rates. On the other hand, it would have been better if the money, instead of going into the Government's purse, had gone direct into the expansion of British output.
The Budget has hit drinkers, smokers and travellers. At the same time, it helps investors. That is surely the right balance and direction. I am glad to see that there will be a reform of stock relief, including consortium relief, and to note the help given for conversion from oil to coal, to the tune of £50 million a year.
The construction industry is helped, though it is not given a large handout. However, that is helpful and encouraging. Again, the initial allowances for new industrial buildings are on the right lines.
The measures to give relief to let land are only fair. They should help to bring managers into farming in a way that has been denied them in recent years because of the inflationary price of land.
The discounted price of council houses being the proper rate for stamp duty seems only fair, since that is the money that passes.
I do not wish to detain the House long, because I know that other right hon. and hon. Gentlemen wish to speak, but it would be wrong for me, as chairman of the small businesses committee, not to refer to the increase in line with inflation of VAT exemption from £13,500 to £15,000 a year. It is also to be welcomed that the 40 per cent. relief of corporation tax for small companies increases to £80,000, in line with inflation, and, more particularly, that the scale for marginal relief limit is to be changed. I and my colleagues have long argued that the marginal relief measures between small and large firms operated not as a relief but as a deterrent, because at part of the scale corporation tax shot up to 66 per cent. actually charged.

Mr. William Hamilton: On a point of order, Mr. Speaker. A document is being circulated in the press about the Civil List and is not available to hon. Members. It is causing a lot of concern in the Lobby outside. I hope that you will take steps to see that it is made available to hon. Members as well as to the press.

Mr. Speaker: If it is a parliamentary paper I shall, of course, make inquiries. At the request of the hon. Member for Fife, Central (Mr. Hamilton), I shall find out what has happened. Parliamentary papers should, of course, be available to hon. Members first. I know nothing about the matter, and I shall have to make inquiries.

Mr. Loveridge: It is not clear at the moment how much the new relief will reduce that 66 per cent. marginal cost, but it sounds as though it will relieve it substantially. It is, therefore, a greatly welcomed improvement.
Welcome, too, are the proposals that companies will be able to buy their own shares and that capital losses can be set off against investment in companies as well as in individual firms and partnerships, and that redundancy payments will be taxable only over £25,000, which will help many people who receive redundancy money to start up businesses of their own.
The new improvements to be made in the management of COSIRA are welcome, though many of us would have liked COSIRA to extend its services to business in country and rural districts to towns as well.
Our purpose has been to increase output per man, but as yet that has not been fully achieved. No doubt it will come, and certainly in the small business sector there is the will to achieve it. In Japan there are 5.4 million small businesses; here there are 1.3 million. Japan's rate per head of population is double ours. We hope that these measures, combined with those in the previous Budget, will be a start in doubling the small business sector in Britain, and thus providing an additional 1 million jobs.

Mr. Campbell-Savours: The hon. Gentleman has spent much of his time congratulating the Government on their small business package, but he has said nothing about


the effect of the Budget in deflating the economy and reducing demand. Is not that expansion of demand a major contributor to any reflation of small businesses in the United Kingdom? Why does the hon. Gentleman not address himself to the real issue that is being discussed in the Lobby outside, in the Tea Room and all over Westminster, which is that small businesses nationally have taken a bang from the Government in the Budget?

Mr. Loveridge: No doubt the hon. Member will wish to make his own contribution to the debate shortly. We all want demand to grow. It is the long-term objective of every Government to see everyone in the kingdom better off. But we cannot print money without printing inflation. Not only in our time, but throughout the centuries, extensive inflation has always led to a loss of jobs in whatever country it has occurred.
Our purpose is to create jobs. When the hon. Gentleman says that I am not creating jobs for small businesses he does me and my colleagues an injustice, because our purpose and belief is that we can create 1 million extra jobs over and above those that will come from reflation of the economy. If all the 50 measures that have been advocated by my colleagues and myself and outlined in my Small Finns Expansion (Inquiry) Bill recently put before the House were put into effect, more jobs would be created. Some of our proposals have been accepted by the Government, but not all of them. With good fortune, I hope to stay in the House long enough to see them all accepted and the 1 million extra jobs created.
On that happy note for the future I come to the end of my speech and ask the Government to implement in the next Budget all the remaining measures that my committee has advocated.

Mr. Roy Hughes: The hon. Member for Upminster (Mr. Loveridge) described the Budget as a tough one, and I agree with him. I also agree with his recognition of the unused capacity that exists in the economy at present. However, I dispute his suggestion that that unused capacity could be taken up by building new naval dockyards. I could suggest many better ways of spending the nation's resources.
In fairness to the Chancellor, I welcome the 2 per cent. cut in the minimum lending rate and the modest concessions on energy costs, though they are rather belated. Certainly, some of us have been advocating such measures for a long time. These propositions and the other assistance to small businesses, to which reference has been made, are welcome, but they are really a recognition of the damage that has been done in the past two years to the British economy and, more particularly, to manufacturing industry.
The Chancellor of the Exchequer referred to the 9 per cent. drop in output last year in the manufacturing sector. That was a very serious admission. Like myself, the Chancellor is a South Walean. I suggest to. him that open confession is good for the soul—as you would also readily recognise, Mr. Speaker. But during the Chancellor's speech there was no real mention of unemployment. As my right hon. Friend the Leader of the Opposition said, it was essentially a Budget of no hope.
There is a prime need for the Government to change course and to get away from their Right-wing dogmatic

and Friedmanite policies, which they have pursued for almost two years. Tremendous damage has been done to the economy and it is very difficult now to put that right.
I want to refer briefly to a side issue in relation to the Budget and the taxation measures proposed by the Chancellor. It will not have escaped the notice of hon. Members that at the very time when the new measures are being proposed the Government are locked in dispute with their own Civil Service. I spoke to over 200 civil servants in my own area on Monday, and they seemed to be in a very determined mood, so the Government should ask themselves whether the additional revenue proposed in the Budget will be collected.
During the 15 years in which I have been in the House I have noticed that incomes policy has become a cornerstone of Government economic strategy. The Government, despite their economic policy, seemed to have held up the white Hag even before battle with the miners had commenced. But now they have decided to take on the Civil Service. It would seem to be a case of hammering the weak and giving in to the strong. That is not a very fair-minded attitude, and does not fit in with my concept of British justice. The Government are acting in a shameful way towards their own staff and they may yet come unstuck in this area.
As for transport and the measures included in the Budget Statement, I suggest that it is time for all Governments to recognise that cars are now almost literally public transport. People go to work in them. The days of leisure motoring have paled almost into insignificance.
I appreciate that oil is a very valuable commodity, but we must recognise that we are now self-sufficient, so it is a retrograde step to put up the cost of petrol by 20p a gallon and to increase vehicle excise duty to £70. These measures are inflationary in themselves. They will generate new wage claims and make our products, in the ultimate analysis, less competitive in the markets of the world.
The Chancellor said that there was to be no change in VAT. I have received from a firm in my constituency—a firm with an international reputation, the confectionery firm of Lovells—the view that the present level of VAT to the confectionery industry and the allied products industry is grossly unfair compared with that in other countries in the Common Market, such as Germany. One might have thought that the Chancellor would look at this aspect and ensure that firms got the justice they deserved.
The overall flashpoint of the economy at present is certainly unemployment. We hear many figures bandied about, but we know that there are 2½ million people out of work, many on short-time working and many more not bothering to register because they know that there is no chance of obtaining work. All the forecasts indicate that there may be 3 million people out of work by the end of the year. Indeed, some reputable forecasters indicate that the figure could increase to an even higher point in the years ahead. Nevertheless, the Chancellor did not have the courage to admit the error of his ways. The Government have watched with gay abandon as well managed and previously profitable enterprises have gone to the wall. It should have been the Chancellor's principal task in the Budget to try to get people back to work. That can be done only by increasing the spending power in the economy to enable people to buy the things that they require.
The Government should therefore have taken much less in taxation. They could have announced steps to spend


more on social services, such as housing, education and health. They could have authorised projects that would benefit the economy in the long term—investment in roads, railways, power stations, and so on. With an expanding economy and with the construction and building industry working to full capacity, our factories would be able to improve their relative position. Machinery lying idle could once again be fully utilised, enabling unit costs to fall, so that when eventually expansion took place the efficiency deriving from such measures would in turn reduce the level of inflation in the economy.
The CBI, the Select Committee on the Treasury and Civil Service, and the chairman of the Conservative Party's 1922 Committee are all as one in telling the Government that their policies are wrong. In this Budget the Chancellor has failed to heed their warning, and in my view he has failed his test.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. Before I call another hon. Member I want to refer to the point of order raised by the hon. Member for Fife, Central (Mr. Hamilton). I understand that the matter that he was probably concerned about was a written answer to the hon. Member for Halesowen and Stourbridge (Mr. Stokes), which will be in the Official Report tomorrow.

Mr. Michael Spicer: This Administration came into office dedicated to the view that the basic problem of our economy was that there had been an excess of public spending as against private production and that there was an excess of spending on consumption as against production and measures to encourage production.
The Budget fits absolutely within the objectives that the Government came into office to achieve. I was especially interested in the brief intervention by the hon. Member for Workington (Mr. Campbell-Savours), who suggested to my hon. Friend that surely all would be solved if we could increase demand. I may be paraphrasing or caricaturing what he said.
The Budget clearly does not reflect that view. I want to dedicate my brief speech to this issue. My right hon. and learned Friend the Chancellor of the Exchequer—unless I misheard him—said that, far from spending having declined over the past three years, in money terms it had risen by 50 per cent. Let us contrast that with the real matter that he put his finger on—that unit costs have risen twice as fast as those of our competitors. If we are presuming that the problem is lack of demand, I throw in for good measure the fact that British exports in the past year have done better than ever.

Mr. Campbell-Savours: In volume.

Mr. Spicer: Yes, certainly, in volume, but that to some extent reflects the general level of exchange rates.
The thread running throughout the Budget Statement—and I agree with it—is that what is wrong with the British economy is declining competitiveness. The Budget and the Government's strategy are targeted to that problem. That is where the anti-inflation policy becomes so important. British industry must be able to rely on stable

costs. Unit costs are of course partly a question of efficiency. It is the duty of Government to provide a stable currency within which business can manage its affairs. The strategy of providing our country with a sound currency has to be correct by any measure unless one believes—as one suspects must be the belief of some hon. Members on the Opposition Benches—that one can put a wall round the British economy, and unless one allows that the British economy can proceed at one pace while the rest of the competitive world moves at another. The logic of most of what is proposed as the alternative to the Government's strategy is that one can insulate the British economy from that of the rest of the world, create internal demand within that wall, and live with the effects.
The problem is that the British economy, like no other, depends on trade. No other economy imports or exports as much in relation to its gross domestic product or to its population. One has especially in mind a comparison with the Japanese, who are often quoted as living in a country similar to ours. As a proportion of the population and of GDP, Japan exports and imports a far smaller amount than does this country.

Mr. Campbell-Savours: Does the hon. Gentleman accept that the Japanese were able to insulate domestic production from the ravages of overseas competition by way of tariff barriers and other forms of protection? Is he not putting forward a black and white argument by suggesting that we are pursuing a siege economy argument, as against a grey argument, which incorporates the principles of protection, yet at the same time recognising that we have international obligations in our trading?

Mr. Spicer: I know that many of my hon. Friends want to speak in the debate and I shall not pursue that matter at great length, except to say that the Japanese economy was protected at a time when, historically, it was not as dependent on world trade for its continued existence as was this country. It also has a much bigger internal market than ours.
We ignore unit costs at our peril. In that context the Government's key priority to combat inflation is correct. To claim that by creating internal further demand one will somehow solve the British economic problem is either to be dishonest—which I suspect in many cases it is—or to apply principles that in the real world do not exist.
The Budget Statement should be more of a state-of-the-nation speech. It should be allowed to wander into paths that are perhaps more appropriate to other departments. I have especially in mind labour practices. If one takes a view about inflation and about unit costs, one should not avoid some kind of pronouncement about labour costs and practices. That is true particularly about monetary policy. I am bothered about an emphasis on monetary policy that ignores the inflexibility and lack of perfection—if I may put it that way—in the labour market. That is one of the basic problems that we have to tackle. The Government must get to grips with the suggestions in Green Paper on trade unions. It must come up with firm policies, in the context of the policies and strategies in the Budget Statement, to deal with the inflexibilities and monopolies in the labour market. Until we get those right, many of our policies will not have their full effect.
I want to make two comments on the Budget judgment. The first is that we must be wary of clamping down on the


economy during depressed world conditions and, at the point when the world begins to come out of the recession in a year or two's time, suddenly expanding the economy. That would greatly delay the solution to inflation, which, I agree with the Government, is the prime objective.
The second point in my necessarily hurried speech is the question whether we are treating the public sector borrowing requirement in too global a sense; in particular, whether we are making sufficient of a distinction between capital and current spending. There should be an emphasis upon spending money on investment for the future and on providing an infrastructure within which our industry can flourish.
I agree with the measures that the Chancellor has proposed for trying to create new businesses, but we must have an infrastructure within which those businesses can flourish. It is vital that we distinguish between our attitude towards, for example, pay settlements in the public sector and our attitude towards spending on capital and investment projects.
I am convinced that the strategy on which the Government came to power has every possibility of achieving what is good for this country. If we can restore a sound currency, so much will flow, especially from the great resources in energy and the skills that we possess. In 10 years the country will be transformed. The whole nation will benefit. The Budget must be seen in that context. In that context I approve of it.

Mr. John Maxton: It is rare for me to agree with a Government Member, but I agree with the argument advanced by the hon. Member for Worcestershire, South (Mr. Spicer) about the Government's complete inability to distinguish between capital and current expenditure, in the public sector. I believe that both should be increased,. However, if the Government cannot increase current expenditure, they must increase capital expenditure. If it is not increased, the economy will never recover, because the fiscal structure of our country will not exist in order to form the basis on which it can recover.
Recently I spoke to some civil engineers. They did not vote for the Labour Party. Most of them voted for the Conservatives at the last election. They say that 95 per cent. of all expenditure in the civil engineering industry, which is entirely in private hands, comes from the public purse. They say that of the other 5 per cent. a fair proportion goes to private firms that are building large projects, such as petrochemical works, and receiving regional aid and other grants from the Government.
Large cuts have occurred in the capital programmes of local authorities and other public bodies. Civil engineers say that the sewerage system is on the verge of collapse, roads are not being maintained to sufficiently high standards, the water supply industry is on the verge of collapse, and the railways need massive capitalisation if they are not to cease to operate.
Civil engineers are not scaremongers. They are not trying to make political capital out of the Government's policies. They are in the private sector of industry and are having to lay off workers and create unemployment. Many thriving companies are becoming bankrupt as a result of the Government's inability to distinguish between capital and current expenditure in the public sector.
Chancellors of the Exchequer often deliberately try to confuse those of us who are not trained economists, and possibly even those who are, with many references to MLRs and PSBRs and other jargon, in the hope that we will not realise exactly what they are doing. When I listen to a Budget Statement, I try to understand how it affects my constituents and particularly the poorest among them.
There is no question but that this Budget will hit the poorest hardest. It will not hit the wealthy in our society anything like as hard. It is a class Budget, as we might expect from this Government. The Budget is aimed at the poorest in our society. The Government again seem determined to solve our economic problems at the expense of the poor rather than at the expense of the people who can afford to bear the burdens.
There is to be a 1 per cent. cut in benefits. I notice, Mr. Speaker, that you may be a beneficiary of the old-age pension in, I hope, the not-too-near future. You will, therefore, not obtain the full increase in the pension. The Government's argument is that the pension rose by more than 1 per cent. above the rate of inflation last year.
I emphasise that people receiving pensions, unemployment benefit and supplementary benefit are the poorest in our society. Their rate of inflation is higher than that of the rest of the community. Their housing is usually in the public sector. Their basics are heating, lighting and food. Rents in the public sector have risen by much more than the rate of inflation in the last 12 months. If the Government have their way, they are likely to increase even more.
Although I welcome the cut in interest rates, that means a decrease in the cost of housing in the private sector when people living in public housing have to pay massive increases. Electricity and gas charges have risen by more than the rate of inflation. People on low incomes have to purchase basic foodstuffs at the corner shop rather than at the supermarket. That is because they do not live near a supermarket and cannot afford to buy in bulk. They do not have freezers in which to store food, and sometimes they do not even have a refrigerator. Such people pay more for their food than average. To argue that they were paid 1 per cent. more than the rate of inflation last year and that therefore they should receive that much less this year is a disgrace.
A cut in income tax was probably the election promise which, in the better-off South-East and Midlands, had the largest impact and won the election for the Conservatives. Today the Government chose a back-door method to increase direct taxation. The non-implementation of the so-called Rooker-Wise amendment means that many people who were not paying income tax will go over the tax threshold and start paying tax. Even people earning higher wages will have to pay more as their income goes up and they move into higher tax brackets. The Government have not fulfilled their promise to cut direct taxes. They have increased taxes today. The people should be aware that they have increased direct taxation, despite the pledge that won them the election. At the next election, which I hope will be soon, the people should bear that in mind.
The incomes of the better-off will be safeguarded to some extent because mortgage interest rates will drop and they will have more realisable income in their pockets. The higher the income, the higher the mortgage, and therefore the better off the high income earners will be. To


some extent that will relieve the effects of direct taxation being increased. Most of the poor who live in public housing will have no such advantage.
Increases have been made in the price of the basic pleasures of the poorer people. There is an increase in the price of a pint of beer. There is an increase of 14p in the price of a packet of cigarettes. When I telephoned my wife, she said that she hoped that that would make me give up smoking instead of just talking about it. I am sure that this will happen to many people. Smoking and drinking are not desirable pleasures, but for many working people and for many poor people the odd pint of beer and the odd packet of cigarettes are the only pleasure. They will now be able to afford fewer of these pleasures, if they can afford them at all.
There is, of course, the employment effect. In the constituency of my hon. Friend the Member for Glasgow, Springburn(Mr. Martin) there are tobacco factories. Some of my constituents work in those factories. They will be hard hit by the inevitable decline in the number of people who smoke cigarettes. That will create further unemployment in an area where the rate of unemployment is already far too high.
I am the first Scottish Member to speak in this Budget debate. The whisky industry pleaded with the Chancellor not to increase the price of whisky. It will be hard hit, and there will be consequent effects on unemployment in areas already hard hit by unemployment.
The rise in the price of petrol will inevitably have an inflationary effect throughout the whole economy. I accept that a small step has been taken in the Budget to deal with the anomaly of the company car, but those drivers are not the ones who are hit hardest by the increase in the price of petrol. It does not hit hard at the person who receives an allowance towards the cost of petrol from his company or from Parliament. It hits hardest at the person who tries to run his own car out of his own pocket and who drives his"banger" to and from work. I understand that 70 per cent. of people have a car and petrol provided by their companies. Those who are hit are the remaining 30 per cent. who try to run a car out of their own pocket.
The Budget is aimed at and hits the poor. It will not solve the problems of inflation. The Government should appreciate that inflation is not the only priority and the only target of economic management. Unemployment is now as great a problem as, if not a greater problem than, inflation. The Government should be tackling that problem. The Budget does nothing to solve the problem.

Mr. John Stokes: Any fair minded person will sympathise with the Chancellor in his difficult task today. His speech was delivered with the usual urbanity, temperance and clarity that we have come to expect from him. The fact is that the United Kingdom has become a difficult nation to govern. Expectations have risen so much since the last war that some people seem never to be satisfied. This rise in material expectations does not always seem to have been accompanied by any increase in personal happiness or contentment. Indeed, judging by the strike of civil servants yesterday, which I and many other hon. Members deplore, some of those who seem to have the most comfortable and worry-free jobs in

the land seem to be the most discontented. I know what the hard-pressed industrial workers in my constituency think about that strike: I agree with them.
The main failure of the Government, which they admit, has been their failure to cut public expenditure. Looking back with hindsight, the Government should have wielded the axe with extreme rigour from their first Budget in June 1979. The plain fact is that the productive effort from our factories is so low and yielding so little profit that we can barely afford, as a nation, to defend ourselves, which is vital, or to sustain the vast structure of the Welfare State which we have built over the years. The Government can claim success in cutting the rate of inflation, but they still seem to find difficulty in reducing the PSBR. It may give cause for anxiety that inflationary pressures could start again in due course.
I welcome, as, I think, do most hon. Members, the cut in MLR. I hope that some sectors of industry will now stop shouting about the high value of the pound. After all, the pound has fallen. In the end, a low pound is just as harmful as a pound that is too high. I believe that the reduction in MLR is the main help for industry in the Budget. It will help every sector of the nation's economic, commercial and industrial life, and particularly the construction industry.
I welcome the reduction in energy prices, small as they, seem. I feel, however, that the Government have got their sums wrong and that they should have another look at energy costs. I am sorry that there has been no cut in the insurance surcharge, which is another tax on industrial, manufacturing and exporting companies.
The increases in taxes on drinks and smoking were expected and do not displease me. The increase in car and lorry taxation and the increased tax on petrol will put further costs on industry and bear down still more on the hard-pressed motorist, particularly those living in country areas, who depend so much on their cars. I believe that these increases in taxation were inevitable and necessary if the Chancellor was to try to recover some revenue. The huge payments to British Steel, BL, and the National Coal Board and British Shipbuilders are a fearful loss of blood to the body politic and make the ordinary, prudent business man despair that we shall ever get the public sector right.
I believe that the only solution will be to sell off as much of these enterprises as possible to the private sector. I am disappointed that more progress has not been made in this direction.
I recognise that there probably had to be an increase in direct taxation, which is the result of no increase being made in the tax allowances. If we, as a Conservative Party, believe in incentives, as we do, I hope that, at least in the next Budget and in succeeding Budgets, we can turn once more to reducing the burden of direct taxation.
I welcome very much the various steps promised to help the small business man. What everyone awaits is the end to the world slump, which now looks as if it will come later this year than we were led to expect. What is also badly needed in this country is a mood of hope and optimism about our future as a great trading and manufacturing nation.
I welcome the increased pensions. I hope that pensioners will now realise that they are, on the whole, an exceptionally favoured class in the community.
The Government's attempt to widen their scope in borrowing is enterprising, if, perhaps, not always wholly dignified. I hope that the Government's fund-raising


efforts will not come to look too much like a hire-purchase finance company that is desperate to attract deposits. Nor am I exactly delighted by the once-and-for-all tax on banks. This rather smacks of the efforts of Sir Stafford Cripps in the Labour Government after the last war. Industry, which I mainly represent, envies the banks and the life of the banks. I have, however, met very few industrialists who want this sort: of tax placed upon banks. They want the banks to do their main job—to lend to industry and to work to secure the recovery of this country.
I am not altogether happy about the additional tax that is to be placed on our great independent oil companies, on which we depend for so much.
Sometimes when we are depressed and worried we forget our virtues. We forget what a civilised country we are, what admirable institutions we have, how kind and tolerant our people are, in spite of occasional violence and picketing, what brains we have, what inventiveness, what achievements in trading and in financial services.
Our problem lies mainly in our manufacturing sector. There, still more emphasis must be placed on research and development, design, production, marketing and aftersales services. The greatest leadership is required from those in charge of our factories. An intense effort is required to pull together our nationalised industries.
Our troubles are not economic and industrial; they are spiritual. There is some strange malaise. We almost seem to doubt that we can match the products of France, Germany, the United States of America, or Japan. Yet in our heart of hearts we know that we have the skill and ability, if only we put our minds to it and are imbued, as the CBI said, with the will to win.
This change of attitude is essential if we are to succeed. There is increasing evidence of this on the shop floor and some evidence in management. It is to this task of rallying the productive capacity of the nation that the Government must turn in the coming months. This spirit must get right through from the Government and from all of us here to the family, the schools, the universities and technical colleges, to charge hands and foremen, managers and directors, schoolmasters and parsons, and all those who have influence on young people, if this country is once again to regain its industrial greatness, which, regrettably, has been in decline for more than a century.

Mr. Michael McGuire: It is a pleasure to speak after the hon. Member for Halesowen and Stourbridge (Mr. Stokes), because he always issues clarion cries. His clarion cry today was that he wants to see Britain great once again, and I think we are all in agreement with him there. Our arguments would be over the methods that are needed to bring that about.
The Chancellor of the Exchequer addressed the House for an hour and 40 minutes, and it is difficult within the short time that has elapsed for hon. Members to get a perspective of the proposals in the Budget Statement. My overall impression is that the Chancellor is just tinkering. The Minister of State Treasury, will appreciate the phrase, because in the past such phrases as"a touch on the tiller" have been used in speaking of the Budget. In this case there has been a bit of tinkering, which does nothing substantial.
I follow the line of thought expressed by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), who said that he judged these matters by his own

experience. He asked whether the Budget would improve the lot of those who supported the Opposition—those who need help. Our policy is that the broadest backs should bear the biggest burden, and my impression is that the Budget does not go towards that desirable end.
When the present Government were in Opposition they railed against the then Labour Government about many aspects of our policy. They boasted that if they were in power they would galvanise industry, and small businesses in particular. They boasted that they would halve unemployment; all firms would be taking on a minimum of five people and possibly 10 or 20, and firms would be looking for workers. They derided our incomes policy and said that we conceded to the powerful and mighty because we had an incomes policy. They believed in free market forces. But they do not, as they have consistently proved. They have bowed to force. They have punished those who cannot offer force as an alternative. That is not good for the health of the nation, whether the Government in power are Labour or Conservative.
The Chancellor told us how badly our industrial performance compared with that of our industrial competitors. There is no doubt that we compare very unfavourably. We have suffered a 14 per cent. reduction in production. The Chancellor mentioned the textile industry. Sometimes, in short debates, we have difficulty in catching Mr. Speaker's eye. I sat all through the debate on the textile industry but I was not lucky enough to be called. Had I been called to speak, I would have referred to a topic that I hope will not be out of place in today's debate. The textile industry's wounds are not self-inflicted. The industry is suffering from the effects not of free trade but of unfair trade. It is a model industry from the point of view of capital investment and industrial relations.
The Budget will not do much, if anything, to redress the industrial decline that the nation has undergone. That decline is more severe than that which has occurred in any other country. If anyone had said in the House, 10 years ago, when the bonanza of North Sea oil was a hope rather than a certainty, that we would be self-sufficient in anything and yet have the greatest industrial decline in Western Europe, no one would have believed it.
I am not an economist, but my feeling is that we are not using wisely enough the tremendous financial resources that flow from North Sea oil revenues to resuscitate and modernise industry. Modernisation goes with a planned policy of wide training schemes for workers, who are inevitably thrown out of work by greater capital investment. We do not have that policy. The 2 per cent. cut in MLR is welcome. The Government's strategy, like that of the Labour Government, is to get down the rate of inflation.
The other week I was talking to some business men at the factory of a small, successful firm, which is still growing in spite of the difficult industrial climate, and they told me that if they were offered a 2 per cent. reduction in MLR or a 2 per cent. reduction in inflation, they would go for the reduction in inflation. They said that it would be far more beneficial to them. So I think that that will be very welcome.
I am glad that the Minister of State, to whom I referred earlier, is still here and is studying as keenly as ever the biographies of Members of Parliament who are present, perhaps hoping to be called, and I should like to draw his


attention—I know that he is an expert on these things—to a letter that I have had from a local society that helps mentally handicapped children. It reads:
In view of the present emphasis being given to the role of voluntary organisations, MENCA"—
which is an acronym for the Society for Mentally Handicapped Children—
is striving to increase income and reduce expenditure. This raises again the unfair burden which the larger, service charities incur each year through the operation of value added tax. Last year, our organisation's unrecovered VAT was £40,000.
We feel that we should be treated for VAT purposes on a basis similar to local authorities, whose services in the relevant field are in many respects comparable to our own. There is little doubt that, if MENCAP is not given this financial concession, families in your constituency may suffer considerable inconvenience and even hardship.
The letter urges me to recommend to the Government as strongly as I can that in the next Budget MENCAP is brought within the framework of section 15(3)(i) of the 1972 Finance Act. I hope that I have been able to convey to the hon. and learned Gentleman the need to have a look at problems of this kind.
I know that I said how difficult it was to absorb everything in the Budget Statement, but I realised that there were certain concessions in this field and for the handicapped. The purchasing of ambulances, and so on, was mentioned, and I welcome the mobility allowance increase. I have a son who is a recipient of that allowance. Indeed, I very much welcome anything that helps handicapped people in particular.
Like my hon. Friends, I cannot see that increasing the price of petrol by 20p per gallon and putting £10 on the road fund licence can be anything but inflationary and, like my hon. Friend the Member for Newport (Mr. Hughes), I agree that cars have now become a form of public transport. Punishing people like this will, I think, come back on the Government. Their non-governmental incomes policy will be under more stress and strain, and they will have bigger fights on their hands.
I look forward to the day when the vehicle licence fee is abolished. A much more sensible action would be to abolish it and increase the cost of petrol, because the bigger, more powerful cars and lorries would then appropriately bear the biggest burden and there would be no fiddling things like rating cars on their horse power, and so on. That is a dream which I hope will come true under a Labour Government—soon to come; it cannot be long delayed with the performance of hon. Gentlemen on the Government Benches.
As for income tax, like many other hon. Members I had written down a whole series of headings to help myself write down the assumed increases in—I had written down"personal; married couples' allowance; wife's allowance; age relief; and tax bands". Now I see that there is going to be no change—not even a touch on the tiller. The Government got into power, as my hon. Friend the Member for Cathcart said, on the proud but, we now know, vain boast that they were going to reduce taxation, both personal and indirect. The fact of the matter is that with the inflation that has taken place we are not even to be given a modest increase. So that was a false boast.
In the debate on the Queen's Speech I said that all the forecasts indicated that there was going to be pretty thin gruel for the people of this country in the next 12 months. I am sorry to say that that thin gruel has been watered down

substantially. The Government seem hell-bent on proving the truth of the sick old joke about the operation being a marvellous success but the patient unfortunately dying. A Budget of this kind is going to help the patients to die much more quickly than they might otherwise have done.

Mr. Peter Bottomley: I thoroughly welcome the increase in child benefit. I should like to congratulate the Treasury Front Bench on its action in making sure that child benefit has gone up faster than tax allowances. Since the introduction of family allowances in the 1940s we have seen many hiccups in family incomes support. I think that hon. Members in on both sides of the House will welcome the fact that this Budget, like one or two others, has made sure that the level of income that people expect for their children has risen faster than have national average earnings during the past year.
During the past year we have seen earnings rise by between 10 and 25 per cent., depending upon the month for which the calculation is made. During the forthcoming year we can expect earnings to rise by less than 10 per cent.—they certainly need to—but to have what will be a 10 per cent. increase in child benefit is right. It helps to make a low level of earnings increase more acceptable to families who are caring for children. I think that it is important to emphasise that we need to get the average level of pay settlements down substantially more than we have so far. Child benefit is the only way to step in to help those families who have child dependants and who are at work.
During what is necessarily a short speech, I bow to the judgment of the Goverment on the question of reducing the PSBR. I happen to believe that it is fairly easy to finance a higher level of PSBR on the expectation of falling interest rates, but I think that the study that they have given us should perhaps take precedence over my own possible preference. I would say to the House and to the country that, given a target figure for the PSBR, it is possible during the year for the country as a whole to affect the outcome on earnings and the outcome on prices. Given a target level, especially in cash terms, which the Chancellor has introduced to us today, I believe that we ought to be able to get the rate of inflation down below the 10 per cent. that is expected for November—a 10 per cent. which, presumably, includes 2 per cent. provision for the indirect tax and Excise duty increases in the Budget—and to aim to have by this time next year a rate of inflation that is down below 5 per cent. That would be compatible with average pay increases of below 5 per cent. If we can get average pay increases at, say, 3 per cent. by this time next year, the demand effects of the Budget will be different from what they will appear to be if the average level of pay increases over the next 12 months is 7 or 10 per cent.
I do not believe that it is possible, with a TUC that is committed against an incomes policy, a Labour Party conference that is committed against an incomes policy and a Tory Government who are committed against an incomes policy, to achieve the kind of low level of average pay increases which we all know is necessary unless we all talk about it far more. So, my final point to the Treasury Front Bench is this: do not just come along at Budget time and say that because of the aggregate behaviour of people in the economy we cannot raise tax allowances or other things. Do say, a year in advance, that if we can get a certain level of price increases, or a certain level of pay


increases, or a certain achievement on the PSBR, or whatever the targets may be, we will provide certain rewards; we shall be able to afford to do more for the elderly, or children, or various projects. I believe that only by doing that is it possible for the Government to get the co-operation of most of the people in the country, for most of the time, during the year that matters.
On those grounds I give my general support to what the Chancellor has announced and I repeat that child benefit is valuable and that what has happened on child benefit is good. Let us hope that we get some more next year.

Debate adjourned.—[Mr. Thompson.]

Debate to be resumed tomorrow.

British Railways (No. 2) Bill (By Order)

Order for Second Reading read.

7 pm

Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
The Bill is one of a long line of general powers Bills that have come before the House promoted by British Railways. On this occasion it is a somewhat smaller document than usual. A number of matters are in contention, and I shall refer to them in a moment.
I wish to follow precedent and say a word or two about the general position of the railways. The railway system in Britain is undergoing an important and encouraging transformation. It is interesting to note that we are once again hearing talk about building a Channel tunnel. I am delighted to welcome the Under-Secretary of State for Transport to our deliberations. The Government are considering British Rail's plan for electrification. The Budget suggests that personal transport by car will become more expensive, so surely rail travel will be an even better deal than in the past. The plan to electrify, as nearly completely as possible, the railway track in Britain should be given a fair wind. If 80 per cent. of passenger trains and 70 per cent. of freight-carrying trains were electrified, about 120 million gallons of oil would be saved each year. That is no mean feat for a country which, with the remainder of the Western world, must be careful about its energy resources. When the Government examine this plan, I hope that they will draw a distinction between investment in that project and money to prop up industries in financial trouble. This plan is investment for the future.
The Bill covers a number of aspects of the rail network. The contentious items are largely contained in clause 5, which provides the British Railways Board with powers to undertake certain works. A number of my hon. Friends expressed concern about some of them. I shall try now to satisfy their need for explanation. With your permission, Mr. Deputy Speaker, and that of the House, I shall ask to be allowed to speak again, if necessary, to reply to any further points that may be raised.
Work No. 1 relates to the establishment of a link railway between the Tilbury-Barking line and the Thames Nitrogen Company Limited. That company is a fertiliser manufacturer, and the feed stock for its operation is ammonia. Currently the ammonia is delivered to the company's premises by road, and about 150 tonnes are moved each week. Because of the rigorous and proper safety requirements for moving such a product, only about 17 tonnes can be moved on each journey. The whole process requires a substantial fleet of road vehicles. The company, quite reasonably, has asked to be linked to its suppliers by rail. The British Railways Board has always been anxious to encourage customers to have rail links wherever appropriate, as it is in this case. The proposal should be welcomed from a safety aspect and it has a good deal to commend it. From a cost-effectiveness aspect, for the reasons I gave about road transport and in the light of the proposals in the Chancellor's speech, such a link would make good business sense.
I recognise that there is a slight dilemma because the Department of Transport is considering a route for the A13. If the Under-Secretary intervenes in the debate, he


may wish to comment on that position. It is the board's contention that its plan for a link railway should remain part of the Bill until a final commitment has been made about the route of the A13, because it appears that its plan enjoys the support of the House.
Work No. 2 relates to the deviation of the LutonDunstable branch freight line to provide land for the construction of a road for Bedfordshire county council. There is no argument about that new road being urgently required. The problem is that the land required is currently leased to the Luton Town Football and Athletic Company Limited, usually known as the Luton football club. It has leased that land from British Rail since 1973. The club itself has been in existence since 1885. Some of the land in question will be required for the project. The club is concerned about the effect that the removal of that land will have on its ability to remain a viable commercial enterprise. British Railways have indicated that they are anxious, whenever possible, to provide alternative land—for example, for car parking. They have made a clear proposition about the alteration to, and the movement of, the Kenilworth suite—a suite of directors' facilities and other facilities—so that it can remain, albeit in a slightly altered position.
My hon. Friend the Member for Luton, West (Mr. Carlisle) is concerned about that matter, and has tabled a blocking motion against the Bill. I assure him that, as he well knows, there is no question but that the relief road is required, that this is the preferred line of route and that the facilities that British Railways are anxious to discuss with the club should meet most of the objections. I realise that there is talk about the programme for the development of the road slipping back from 1983–84 to 1985. That might provide a temptation to omit this section from the Bill. The inclusion of that future work in the provisions of the Bill would provide greater time for the club and all interested parties to arrive at a more appropriate and sensible solution than if the works were carried out earlier. Therefore, I hope that that argument will not be used to have this provision removed from the Bill.

Mr. John Carlisle: It seems that my hon. Friend feels that if the Bill goes into Committee in its present form there will be a time advantage. As I and the Luton Town football club understand it, there would be about two months between Second Reading and Committee. Much will depend on Mr. Speaker's programme. I fail to understand how that timing can be of any advantage to the various discussions that are bound to take place between the interested parties.

Mr. McNair-Wilson: I am grateful to my hon. Friend, because he has made the point to which I was about to turn. There will be ample opportunity to discuss these matters when the Bill goes to the Examiners. I accept that delay on the part of the county council in implementing this part of the programme could lead one to hope that British Rail would no longer want the branch line. I cannot give my hon. Friend any such assurance. British Rail is determined that the line should remain. It is an important freight link.
I accept my hon. Friend's argument that the postponement of the facility will not alter the need to make the changes to which I have referred. However, I hope that my hon. Friend will not feel that the postponement of implementing the plan could lead to British Rail dropping

its requirement for the line. I hope that my hon. Friend will allow the Bill to go into Committee, when the issues that he and his friends have properly brought forward can be fully discussed. I hope that a happy solution will be found. I have no doubt that my hon. Friend, if he is fortunate enough to catch your eye, Mr. Deputy Speaker, will raise these issues.
The remainder of the Bill is largely non-contentious. However, there are two matters to which I shall refer, as I consider them to be of significance. Clause 8 deals with the stopping up or diversion of roads or footpaths at certain specific locations. There is one such stopping-up or diversion that has caused the Ramblers Association some concern, namely, that at Steventon. The proposal raises a wider issue of which I hope my hon. and learned Friend will take note.
British Rail is using much higher line speeds. Many of the existing footpaths that cross railway lines are very dangerous. Although the Ramblers Association would like to continue to use the footpath at Steventon, it is crossing a main line on which trains are travelling at 125 mph in one direction and at 85 mph in the other direction. It might be all right for an alert person to use the crossing. However, it is necessary to climb a bank to get on to the track. Bearing in mind the high line speeds, surely a much more general power is required to be taken by the Government on access to the track. At Steventon there is a perfectly normal crossing about 126 metres beyond the footpath.
As most of the crossings date back to when the railway system was rather different from what it is today, there is an argument for considering the possibility of more general powers being taken on a future occasion. Perhaps it is sad that such powers are not contained in the current Transport Bill. Nevertheless, powers should be taken to ensure that we put the safety of those on foot high on our list of priorities.
The proposals set out in Works Nos. 5,6,7 and 8 relate to Wales. I think that they will be accepted without argument. They deal with coal trains being able to use a line without modifications to the locomotives. In common with so many other parts of the railway system, modernisation has to be introduced. The cabs of the locomotives are having to be cut down. Gearboxes are failing. Some trains need three locomotives to climb a steep gradient. These works can be taken together. They will benefit the part of South Wales near the Barry estuary and Kidwelly where the works are to take place.
Part V relates to the Sealink train ferry and the need to establish a new terminal. New large ferries are being used on the Harwich-Zeebrugge route. There is no objection to the plans that are contained in part V for those works.
Clauses 51 and 52 are of significance and importance. Clause 51 is basically a tidying-up measure. It extends the powers of search and arrest for British Rail constables, who normally have their powers extended periodically and who have been given such extensions since 1949. The clause proposes an extension to 1985. I hope that the provisions in clause 52 will be welcomed. They raise to a much more realistic figure the fines that can be imposed upon those who contravene the bylaws, especially those that relate to the taking of alcohol on to trains. Many of our constituents are concerned about the vandalism that is committed on trains and about all the other problems with which hon. Members are familiar. It is at least sensible to


provide that the fines should be increased to a realistic level. I hope that the clause will find the approval of the House.
As I have said, the Bill is a fairly modest document. I hope that the sections that are causing hon. Members concern can be dealt with in Committee if not on Second Reading. Each one of these Bills is a form of building brick in establishing a modern, effective and efficient railway system. I hope that the House will give the Bill a Second Reading.

Mr. Robin Squire: I begin by congratulating my hon. Friend the Member for New Forest (Mr. McNair-Wilson) on the lucid and calm way in which he presented the Bill, which made it easy to understand. It may make it more strange to those listening to our proceedings if I now seek to suggest that at least one aspect of the Bill represents perhaps the most contentious and controversial constituency issue that I hope to face during the lifetime of this Parliament. I refer to the Rainham link and the proposal of the Thames Nitrogen Company Limited.
Several of my constituents are opposed to any extension of chemical works and all the predictable consequences. I do not share that view. The company is experienced. It has been handling ammonia and other similarly dangerous materials for a considerable time. I accept that it must make more sense for the loads to be shifted by rail by night on fewer journeys than for the journeys to take place not only by day but all the way from Avonmouth to the East End of London and beyond. Many more journeys take place than are envisaged should the link be constructed.
I am sure that my hon. and learned Friend the Undersecretary of State will be the first to confirm that the hottest issue in my constituency is the possible re-routeing of the A13 trunk road. So hot is the issue that in December 1979 I led a deputation from virtually every political party within the constituency. It made representations for the future line of the route to be across the marshes. That route would prevent Rainham village from being bisected by a large trunk road and would have the beneficial effect of opening up the marshes for industrial development. The area is well sited for such development. I shall not seek to go through all the arguments in favour of that in the context of the Bill, because I am sure that if I did so, Mr. Deputy Speaker, you would suggest that I was dangerously near to being out of order.
It must be obvious that the possible re-routeing of the road is a critical potential development. I venture to suggest that it has more effect on most of my constituents than will any item announced in the earlier business this afternoon. They have been waiting for that development for some time. In those circumstances, my constituents and the local authority, which is also petitioning against the Bill on those grounds, insist that the possible line of the A13 should be preserved unless and until there is an announcement from the Department of Transport about its decision on that road. My constituents will be bitterly disappointed if the announcement from my hon. and learned Friend is not in favour of re-routeing. They would be homicidal if that decision were taken away from them and they were advised at the end of the day that, because of a clause in the Bill the option for that re-routeing was no longer open. That is strongly felt in my constituency.
I shall not try to divide the House on the Bill, because I am sure that during the quasi-judicial stage that will follow this one—assuming that the Bill receives the assent of the House—wise counsel will prevail and that concern will be looked after. If it is not, I shall seek to oppose the Bill by whatever means are at my disposal when it returns. to the Chamber. As it is now drawn, without the safeguard being specifically stated, it will be injurious to my constituency. I should have to oppose it in this form.

Mr. John Carlisle: If I may seek to follow what my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, I wish to speak on work No. 2 of our statement, which is of direct consequence to my constituents and my constituency. It refers to the diversion of the present railway line that will be constructed because of the intended new construction of a road between Luton and Dunstable. I wish to speak with particular reference to the effect which that road will have upon the Luton Town football club.
Perhaps I may crave a small indulgence of the House to put right one or two objections which have been made to me by my constituents. One of the local minority political parties has been putting it about that I objected to the Bill by the mechanism of using the block. My reason for objecting was that I wished to obtain a Second Reading on the Floor of the House so that this important matter could be discussed.
Three major parties are interested in this section of the Bill—the Bedfordshire county council, which wishes to construct the road, British Rail, which is concerned with the deviation of the line, and the Luton Town football club. Other companies in my constituency are affected, such as Laporte industries, which is a fairly large chemical group. A shop, a cold store and some minor agricultural interests would be affected by the provision of that road.
Throughout the planning negotiations between the council and the various county halls and town halls, no objections have been made to the provision of that road, which, as my hon. Friend said, is of great importance to the constituency. I have had no individual constituency objection to the road, which is quite unusual when one bears in mind that the road is of considerable length and would affect residents on either side. It would mean the demolition of a small number of houses.
The joy of the route itself is that the road is an obvious road. It would be of great environmental advantage as well as being of advantage to the traffic in that part of the town. I am heartened to see that the county council proposals take full account of the landscaping of the road and of the trees and hedgerows around it.
There is no doubt that the road is needed for the town and for the county. At today's prices, it will cost about £8 million, which in today's stringent times is the yearly allocation of the county council on its road system. It is an integral part of the link roads of the inner road system which is nearly constructed, which will take much traffic away from the centre of the town and relieve the second busiest road in the county, bearing in mind that the busiest road in Bedfordshire is the Ml. Therefore, there is an obvious and ready need for the road. Most people in the county will welcome it.
The road will be a great link between Luton and Dunstable for various industries. It will be a link towards the Ml and to our flourishing airport in that part of the


town. Our greatest industry and employer in Luton is Vauxhall Motors, which is probably licking its wounds at the increase by 20p of petrol tax. The road will be of great advantage to that company when it is completed, because it links two of its factories. Many local businesses have told me of the advantage that the road will be to them for the carrying of goods. There is no doubt that that road is high in the priority of budgets in the Bedfordshire county council, although it may have to be postponed for a couple of years.
As the road is to follow the line of the railway, the railway was an obvious candidate for closure. It would have been convenient and easy to close the line if British Rail had agreed that the line was not viable and that it could be closed. I would not have made any objections and there would have been no objectors from the Luton Town football club. However, that is not to be. The constant representations made to the Minister and to the county council, and on my part to the various bodies and to the British Railways Board, have proved without any shadow of doubt the line is an essential link.
I have received a letter from the British Railways Board in which it says that the line carries a significant annual tonnage of cement as well as a small amount of oil. It is a freight-only line and is fairly regularly used, but, according to the answers given to me by the British Railways Board, with which I am satisfied, the line is carrying what it describes as some of the most profitable type of traffic. When forms of communication and transport are expensive and highly subsidised, it is good to see that one little line somewhere is making a profit. I was worried that the original contention of British Railways was that the line would be open, in their eyes, only for the foreseeable future. However, on 5 March I was given the assurance that they intend to:
retain the line in the long term.
If that is so, I do not see any point in making an objection to the line remaining open. In recommending to the House that there might be a delay on this section of the Bill, in no sense did I think that the line would be closed. It is of environmental advantage to keep a railway line open. It is an advantage to those who are employed on the line. A union representation has been made to me about that. I am satisfied that that line is a viable concern. I add one rider: if within the next few years the line is closed by British Rail, there will be a lot of egg on a lot of faces.
As the scheme put forward by the Befordshire county council came into being, the normal planning procedure was followed. I shall not detain the House with the exact dates. Suffice it to say that the county council gave itself planning permission to plan for the road. An exhibition was held in the surrounding areas to acquaint the public with what was happening. At the end of the day, the whole question of the road could be subject to a public inquiry. Meetings have been held with interested parties, not least the Luton Town football club, which started its meetings with the county council on 30 May. It had one or two preliminary discussions in May or June with officials and councillors. I am somewhat perplexed that some of the meetings seemed to be nothing more than discussions and not many concrete suggestions came out of them. That is possibly why at this rather late hour there is anxiety that the subject has not had a full airing between the principal parties. Architects have swapped notes: no more than that.
From the start, the football club showed its great anxiety about the issues and the whole viability of the club. That is apparent throughout the discussions between the football club and the county council. The objections have almost grown stronger as time has gone on.
The turn of the year was the first time that any real alteration of the club was recommended by the county council. It is sad that it took that long for alterations to be suggested. They are now in the hands of the club's lawyers. There are plans afoot for an alternative that at this stage seems worthy of discussion, but, unfortunately, there is no test with the plans. More time is needed for discussions between the interested parties. It would be unhealthy to rush the matter. We are talking of a large investment on both sides and a change that will radically alter the viability of the football club.

Mr. Robert Atkins: I fought the Luton constituency with considerably less success than my hon. Friend. I have visited the football club on many occasions, with varying degrees of success, in the company of Preston North End. Is he satisfied that if the Bill is enacted it will not threaten the existence of the club? Am I right in thinking that the Kenilworth suite may be lost? What provisions are being made to replace it?

Mr. Carlisle: I shall deal with that. My hon. Friend is right to point out that the proposals will have serious consequences for the club. I support the club's contentions, although it has been accused of scaremongering. The objections should be thrashed out. It was good to see my hon. Friend at the club not many weeks ago. Needless to say, we beat his side out of sight.
As my hon. Friend the Member for New Forest said, the club was formed in 1885. It is one of the oldest in the land. It came into the Football League in 1920. It has been playing football at Kenilworth Road since 1905. It is a fairly typical Midlands football ground, surrounded by small terraced houses. It is crammed in, close to the centre of the town. It is a homely place, where fine football is played. [Interruption.] The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) is welcome to visit the ground. It enjoys wide support from the surrounding areas. People come from many miles around, not only in Bedfordshire, but from Hertfordshire, Buckinghamshire and London. The club is affectionately known as the"Hatters". It can boast such personalities as Eric Morecambe, who was a director. He is still a regular supporter. Some hon. Members may remember Joe Payne, who scored 10 goals against Bristol Rovers just before the war, which put the town on the map. It is a dynamic club, with an enthusiastic board of directors, keen and willing to invest in the club. It is run by an enthusiastic chief executive, John Smith, who has done much for the club over the past few years.
It is important to emphasise to the House how much that prestigious club will be affected by the proposals. The club is not only used for football: it is used for other purposes during the week and at weekends. The club plays an active part in the life of the town. It encourages young supporters. Under a recent scheme, players are helping the unemployed. We are talking not only of a stadium of four walls, stands and terraces but of the life and soul of that part of Bedfordshire. It is the only league club in Bedfordshire, and its viability may be threatened by the Bill.
The club has a freehold on the stadium. As my hon. Friend the Member for New Forest mentioned, it also has property leased from British Rail, which will be directly affected. One tragedy is that the Kenilworth suite may be demolished. It is provided for the use of directors and the vice-president. It is a prestigious and money-raising part of the club People pay substantial sums annually to be members. It is imperative for the club to have such provision to entertain the many important guests who come to watch the game, such as my hon. Friend the Member for Preston, North (Mr. Atkins). The surroundings are particularly amenable. The suite brings a good financial return to the club. In the cramped accommodation of the club, nowhere else could be found for the purpose. I should be sorry to see that great asset to the club disappear.
The deviation of the line would also mean the loss of an all-weather pitch. Some years ago, through the initiative of the right hon. Member for Birmingham, Small Heath (Mr. Howell), the Sports Council put money into all-weather pitches and other facilities throughout the country. The pitch is well used. In a high density residential area it is used a great deal by the local youth. The borough council, too, takes an interest in the pitch. Its loss would also be a tragedy for schools and other parties that play on it. The club contends that there is no alternative site of comparable facility. No other site can compare with that large site.
To deprive that area of the town and the community of that facility would be a tragedy. It is a facility which enhances the standing of the club. It shows that the club itself is very interested not only in its professionals but in young amateur players. It is an essential part of the training and recruitment of young players in the area and its loss will be sadly felt by many of my constituents.
The Bill would create a major problem in that it would abolish, literally overnight, the coach parking facility which is so important nowadays at football clubs. It would not be right for me to expound on the horrors of the violence and vandalism which, regrettably, occur at football grounds all over the land, but the town club has done as much as it can to keep rival supporters apart. To do that a coach park near the ground is needed. The railway line would go virtually through the middle of the present coach park which is an essential part of the ground in these days of rising soccer violence.
However sad it may seem, it is imperative that visiting supporters be segregated from home supporters. On big match days, up to 60 coaches may need to be accommodated at the Luton ground. If the coach park disappeared, the effects would be horrifying. I am sure that there would be objections from the police and, not least, from my constituents. My constituents have to put up with a great deal of abuse and they suffer great inconvenience on Saturdays—possibly even on Sundays now—from visiting supporters and also, regrettably, from our own supporters. They are long-suffering and patient people. If coaches had to be parked some distance away, so that visiting supporters had to come to the ground through the small streets surrounding it, there would certainly be trouble, and we in Parliament would have a great deal to answer for.
The other section of parking space that would be lost is the VIPs' and supporters' car parking area. Due to considerations of space, there is no alternative to the line

going through the middle of that car park. None of the alternatives recently proposed makes provision for car parking on the scale that the club at present has.
The club is extremely concerned about the safety aspect. This is one of the most serious effects of the Bill. If the Bill goes through as drafted, and if any alterations are made to the ground, the capacity of the ground would be reduced. Its present capacity is about 25,000. The House will be aware of the strictures now imposed upon clubs with regard to safety, and rightly so. Here I pay tribute once again to the right hon. Member for Small Heath who did a great deal of work on this matter some years ago when he was in office. With more than 20,000 people going into the ground, it is only right that we in Parliament, as legislators, and responsible bodies such as football clubs are as safety conscious as possible. One vital aspect of safety is that there be quick access should there be any problems and also at the end of the match when people are anxious to get home.
The provisions of the Bill would virtually seal off one side of the ground. The Home Office green code, as it is called, includes a whole list—I shall not read them out—of provisions which have to be made by clubs to ensure the safety of crowds entering and leaving the ground and to make certain that all entries and exits are smooth and uninterrupted.
This is an important aspect of the Bill. If the railway and the road went through as planned, they would virtually cut off one side of the ground and present enormous problems. Luton Town football club spent about £300,000 last summer on improving its ground and terraces by the provision of separate walkways or cages which, call them what one will and however sad one finds the sight, are an essential part of the ground these days.
The last feature that will be affected is the provision of a segregated walkway which was proposed by the club but for which permission was refused by the county council during the summer. That segregated walkway would have taken rival supporters straight out of the ground and into their coaches without their having to come into contact with any home supporters at all. That was an essential part of the town's legal obligation, of the smooth running of the club and the smooth withdrawal of supporters from the ground. Permission was rejected by the county council on the ground that as this new scheme was to be introduced it would clearly prejudice any decision. It therefore did not wish to let the club go ahead and build the walkway.
That was probably an understandable decision in the circumstances, but it emphasised the need that the club feels for such a walkway. It is essential that any alternative proposals put forward, whether by the county council or by any other body, should include such a segregated walkway. Even when it is built, there will be further problems with the provision of turnstiles, and so on. Anything that the club can do to ban any kind of hooliganism or violence on the terraces and to prevent any problems must certainly be taken into account in relation to the Bill.
Various alternatives have been put forward by various people to meet the changes that will inevitably be made because it is intended to move the railway line. There is a history to this matter in Luton. Various sites have been suggested—from Milton Keynes to Watford—to which the club might move, away from the centre of the town. None, however, has come to fruition, and I believe that the club itself is anxious to stay on the site that has been its home


for so many years. At this moment, a small working party from Luton borough council, South Bedfordshire council and Bedfordshire county council is searching for and discussing the possibility of a new site. A new site today, however, would probably cost about £10 million and would depend very much on the prospects of the club. The club, of course, hopes to get into the First Division next year. It is a very go-ahead club. Nevertheless, the alternative of a new ground is probably too remote and too expensive to be envisaged.
The other alternative put forward, only very recently in real terms, by the county council was for certain building alterations and alternatives which give me some hope that a solution will be found to this terrible problem. The county council has put forward various proposals, but they still need discussion. They need to be thrashed out between the various architects and other persons concerned. I very much hope that whatever happens to the Bill fuller discussions will take place between the parties, because the alternatives that I have seen seem to offer some small relief for the club and I believe that they must be pursued.
Time is of the essence, and time is running out. Here I must take issue to some extent with my hon. Friend the Member for New Forest. If the Bill receives a Second Reading tonight, it will then pass into Committee. At that stage, as my hon. Friend knows, the arguments are put by the various members of the Committee. I suggest that a great deal of time and money could be saved if some delay were imposed upon this particular part of the Bill by British Rail, with the mutual consent of Bedfordshire county council and the football ground. I hesitate to suggest that there may possibly be some abuse of the House if the club has only two months to lay its plans and to undertake full discussions of the new alternatives, which appear reasonably encouraging, before the Bill goes into Committee. Nevertheless, it might be that, as a result of the representations made in Committee on behalf of the various parties, the Bill itself could be delayed even further. Throughout the whole of this rather sorry business there has been a certain lack of communication between the various parties. It is not for me to lay the blame at any particular door.
I am sorry that it has taken literally until tonight before plans have been laid. The two sides are now talking about getting together. But even at this stage we should not rush it. There is no need for this unhealthy hurry.
The Budget proposals have now pushed the building of the road back until 1985. I want it put on record that there is no way in which I would wish to delay the provision of that road because I appreciate its full importance. At the same time, the representations of the main objector—the Luton Town football club—must be heard. It needs time to consider the new proposals, and the county council needs time to make sure that nothing is rushed through.
If this section of the Bill were withdrawn, and if discussions were to take place between the various parties during the summer, we could possibly come back on 27 November with all the arrangements settled and even with the compensation agreed. I feel strongly about the fact that the matter has been rushed during the last few weeks. It would be a tragedy if a great institution such as the Luton Town football club were to suffer great financial hardship, not to mention the hardship to the town, if the Bill were

to go forward. I plead with my hon. and learned Friend to make some recommendation so that a delay occurs in relation to this part of the Bill.

Mr. Frank Dobson: I want to speak on two aspects of the Bill—the whole of part V, which relates to works around and about Parkeston Quay, and clauses 51 and 52 of part VI, which relates to the strengthening and extending of powers to control various unwelcome activities on the railways.
I deal first with Parkeston Quay. I should point out its importance to existing railway and Sealink operations. I can do no better than"half-quote" what the Secretary of State for Transport said in Standing Committee E, which is considering the Transport Bill. The main shipping services using Parkeston Quay are Sealink's multi-purpose service to the Hook of Holland, which carries passenger cars and roll-on roll-off freight, and similar services run by Danish and German companies.
A container service to Zeebrugge is run by Sealink under contract to what in Hansard is called the"Bristol Railways Board", but I assume that that should be the British Railways Board. That service mainly carries rail-borne containers. There are plans to build a new train ferry berth at Parkeston Quay. At present Parkeston Quay handles 40,000 train ferry wagons a year, and it caters for an enormous number of passengers, both rail passengers and people going across on car ferries. It is an important land terminus of the railway system as well as an important connection with the Continent.
For that reason I have paid close attention to the provisions of the Bill, and also to the statement on behalf of the promoters in support of its Second Reading. Paragraph 11 of that statement reads:
Part V would confer powers on the Board and on Sealink UK Limited, a wholly-owned subsidiary of the Board, to construct a new train ferry terminal at Parkeston Quay for the Board and an extension of a quay to provide improved facilities for general cargo handling by Sealink".
That is the truth, but it is only part of the truth. It is true, as of now, that Sealink is a wholly owned subsidiary of the British Railways Board, but once the Transport Bill becomes law Sealink UK Limited will not be a wholly owned subsidiary of the British Railways Board. It will be sold to the private sector.
In selling Sealink to the private sector, it is a vital part of the Government's case that, although British Railways may retain a shareholding in Sealink, effective control of Sealink must pass to the private sector. That is a vital part of the Government's argument for that piece of denationalisation.
In those circumstances, all the powers and duties granted either to the British Railways Board or its present publicly owned subsidiary, Sealink UK Limited, will pass out of the public sector into the private sector. It is important that the House should consider that change.
Among other things, clause 34 provides compulsory purchase powers for Britih Railways or Sealink UK Limited. In addition, unless the Under-Secretary tells us differently—I do not think that he will—it also means that those compulsory purchase powers will pass to the private owners of Sealink, or, more particularly, to its subsidiary harbour company, once Sealink is denationalised.
I know that hon. Members are not present in their legions this evening, but, generally speaking, hon.


Members on both sides of the House have considerable doubts about the exercise of compulsory purchase powers, even by public bodies that are subject to forms of parliamentary restraint and to public pressure by Members of Parliament and others. Even greater doubts exist among Conservative Members about compulsory purchase powers being exercised by private companies that are responsible to no one other than their private shareholders. It is one thing for the House to say"We agree to British Railways, owned by the public and to some extent subject to parliamentary jurisdiction, having the powers of compulsory purchase"; it is an altogether different kettle of fish for it to say that a private company should exercise those self-same powers.
If the Bill gets its Second Reading tonight there will be an obligation on those hon. Members who serve on the Committee to scrutinise closely any compulsory purchase powers which, as a result of the Bill in combination with the Transport Bill, may be transferred to private companies.
I do not want to mislead the House on this matter. I am not at all clear about what happened in the Committee that considered the Felixstowe Dock and Railway (No. 2) Bill. I understand that when the Committee considered the desire of the privately owned Felixstowe Dock and Railway Company to be given compulsory powers under that measure it decided to abate and reduce the compulsory purchase powers that the company sought. Therefore, it is wholly appropriate that the Committee should consider the reasoning and logic behind the decision that was made last year before it considers the proposals that will affect Parkeston Quay.
I am forced to conclude that still greater scrutiny will be required if the House is to do its job properly. Clause 32(b) sets out the interpretation of part V. It states:
'the company' means Sealink UK Limited".
If those who can be bothered to do so will turn to clause 39 they will see that it is in a sense another interpretation clause. It states:
'the Board' includes any subsidiary of the Board".
That is a reference to the British Rail Board. It also states:
'the company' includes any subsidiary of the company".
I understand that it would be possible not only for the privately owned Sealink UK Limited to exercise compulsory purchase powers in the coming year, but for it to allow a subsidiary to exercise such powers. The Under-Secretary seems to be shaking his head. I hope that he is better advised than I am. However, it seems possible that that might be so. A subsidiary of Sealink UK Limited could exercise the powers of the main company.
If any hon. Members are doubtful about a named private company exercising compulsory purchase powers, they will be even more perturbed by the possibility—I put it no higher than that—of an unnamed and as yet unformed subsidiary of that private company exercising such powers.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke): This is not my Bill, and therefore I intervene as a helpful bystander. I understand that the provisions in clause 39 to which the hon. Gentleman objects refer only to"this section", which means clause 39. Therefore,"the company" includes subsidiaries only for the purpose of any agreements entered into between the British Rail Board and the company. The compulsory purchase powers and the powers to construct any works

seem to me—I have been reading the Bill as the hon. Gentleman has taken us through it—to be confined to Sealink UK Limited by clause 32.

Mr. Dobson: The hon. and learned Gentleman used to earn his living as a lawyer before he sat on the Government Front Bench. I am always loth to dispute matters with lawyers. I shall get no fee for quoting from clause 39(4), which states:
As from the vesting in the Board or the company,
—that is Sealink UK Limited—
as the case may be, of the works transferred under an agreement made … all the rights and liabilities of the transferor in respect of the works or any part thereof so transferred and vested as aforesaid shall be transferred to, and become the rights and liabilities of, the transferee.
When members of the Committee consider the Bill in detail, they will probably discover that the rights that will be given to the board or to Sealink UK Limited can be transferred to an unnamed and as yet unestablished subsidiary of the company. Again, clause 39 states:
'the company' includes any subsidiary of the company".
I am not asserting that that is definitely so. However, there is good reason to consider carefully that aspect of the Bill.
Having raised such doubts, I hope that, at worst, the Committee will see fit to scrutinise closely part V. At best, I hope that it will limit any compulsory purchase powers as long as those bodies remain in the public sector. Modern, compulsory purchase law was basically established in the nineteenth century. Parliament gave compulsory purchase powers to private railway companies so that they could buy land all over the country, but it did so knowing that those companies were privately owned. Therefore, it did so knowingly and deliberately.
In addition, Parliament knew what it was talking about and it knew the sorts of works that were envisaged. In many cases it placed severe limitations on the powers of compulsory purchase and laid down the periods of time in which they had to be exercised. If those powers were not exercised within a limited period, they were lost. Those elements were deliberately built into the law of compulsory purchase in order to protect the rights of both individuals and companies whose property was close to, or in the way of, a railway company's proposed lines.
Proper restraints were applied. The Bill does not impose proper restraints. Until now Parliament had not realised that it was conferring compulsory purchase powers on a body that was likely to become a private, rather than a public, sector undertaking. Once the company becomes a private undertaking, it becomes a different outfit. It is not subject to the restraints that apply to the public sector. Therefore, in Committee the Bill should be considered carefully. Perhaps it should be amended to ensure that it will look after the interests of those in the Parkeston Quay area who might, at a later stage, be affected by the exercise of compulsory purchase powers by a private company that is acting in the interests of its shareholders. We are constantly told that the object of private companies is to further the interests of their shareholders. The interests of that private company's shareholders may be wildly at variance with the interests of individuals. Therefore, we should look at this subject carefully.
Clause 51 refers to extending the powers of search and arrest of the British Transport police. It is not the powers that are being extended, but the period of time. I was surprised to discover that British Rail's ability to empower


some of its staff to carry out search and arrest operations on its premises and vehicles needed to be extended. Before I read the Bill I had assumed that that was a permanent part of railway legislation. However, we need such an extension, and I am sure that all hon. Members will welcome it.
Similarly, we shall all welcome an increase in the maximum penalty, from £50 to £200, for offences against the bylaws. The prospect of being fined £50 acts as only a slight deterrent to many of those who cause damage or who act violently both on railway stations and on trains. As a Member who is sponsored by the NUR, I reiterate my union's concern aboout the amount of violence that has taken place on the public transport system. It is not as bad, generally speaking, on the rest of the public transport railway system as it is on London Transport. Nevertheless, far too many men and women who work for the railways are getting abused, kicked and beaten up while going about their ordinary business of trying to provide a decent service for the rest of us. Anything that can be done to protect them is welcome.
Even in that respect I have to refer back to Parkeston Quay, because it is intended in the Transport Bill to extend the powers of the British Transport police to the policing by this public body of the holdings of the privately owned Sealink company. Again I am forced to draw attention to what I regard as a shortcoming in the statement that was submitted on behalf of the promoters. In paragraph 11 it says:
Other clauses commonly found in such provisions … are included
in the Bill. But it is not common for the House to be expected to extend the powers of a public sector police force and increase the fines that may be imposed as a result of the activities of that public sector police force if that force is policing, as there is every prospect that it will, the property of a private company.
The promoters of the Bill should have drawn to the attention of the House, and should draw to the attention of the Committee, the fact that the extensions of policing powers that exist in parallel legislation—for which, admittedly, the promoters are not responsible, but of which they are well aware—will apply to the private sector Sealink company if that is what Sealink and the board wish. There is that shortcoming in the promoters' statement.
I welcome clauses 51 and 52. I hope that the Committee will carefully consider the provisions that relate to Parkeston Quay, and possibly seek to limit the exercise of compulsory purchase powers by the Sealink company once it is privately owned.

Mr. D. N. Campbell-Savours: My hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) raised an interesting topic. When he drew it to my attention, I did some homework to discover what happened about the compulsory purchase provisions in the Bill. I went to the Private Bill Office to obtain the report of the evidence-taking stage of the Felixstowe Dock and Railway Bill (No. 2), a Private Bill that was considered in Committee last year. It concerned the application by the Felixstowe Dock and Railway Company to introduce changes in the area of Felixstowe to its asset, namely, the

Felixstowe dock. The Committee was required to take evidence from local petitioners who objected to the development and the considerable powers that were being given to the company.
During my investigation in the Private Bill Office, I found the statement made by Mr. Drinkwater, the barrister representing the company when the evidence was taken. I shall read the short evidence that he gave in seeking to convince the Committee, on which five hon. Members sat, that the Felixstowe Dock and Railway Company should be given the considerable compulsory purchase powers that now are being sought by the Sealink company and any successor company that may be set up following the distribution of that company when it is denationalised.
In his address to the Committee, Mr. Drinkwater said:
There is a further point in amplification that I would take. If this Committee feels that these powers"—
these are powers similar to the ones that we are discussing today—
should not be granted in this case, you set, do you not, a possibly dangerous precedent for the future where other companies that have statutory obligations come before Parliament asking for powers which they may need in the public interest… in order to implement the undertaking. It may be said against them that they did not get them at Felixstowe in 1980"—
that refers to the Committee on which I and a number of other hon. Members sat—
Why should you have them now?
That is the question that we put to the House, and I believe that that is the substance of what my hon. Friend the Member for Holborn and St. Pancras, South said.
That is a very dangerous precedent, if I may say so. I am measuring my words as cautiously as I can but I suggest that that is a very dangerous precedent. We are not omniscient, and you, Sir, with great respect are not omniscient either. You cannot know what circumstances may arise in the future that might be deleteriously affected in other cases by withholding the very well precedented grant of these powers that we now seek. So many cases where obligations are imposed upon promoters in the public interest require the use of these power… and are granted by Parliament, in case after case. In my submission, it would be undesirable in the public interest—I think I would go that far—that these powers should not be granted in this particular instance, bearing in mind the statutory obligations that we have".
He was trying to convince us in that evidence that we should grant the considerable compulsory purchase powers that that company was seeking so that it would be able to carry out its duties.
I notice that there is a similarity between the words used in this Bill, in the clause that deals with compulsory powers. I quote from clause 34:
and may purchase compulsorily and use such of the lands delineated on the deposited plans relating to the said work and described in the deposited book of reference as they may require for the purposes of the said work".
Those words differ only marginally from the words in the Felixstowe (No. 2) Bill that came before us last year, section 7 of which said:
Subject to the provisions of this Act the Company may enter upon … and use such of the lands on the deposited plan and described in the deposited book of reference as may be required for the purpose of the works or for the purposes of obtaining access thereto.
(2) The power of the Company for compulsory purchase of land under this section shall cease after 31 December 1983." In many ways, the powers seem to be similar.
Inasmuch as on that occasion we were unwilling to allocate those powers to the Felixstowe Dock and Railway Company, I do not see why on this occasion we should be required to allocate the powers that we rejected then.
It was the hon. Member for Holland with Boston (Mr. Body) who, as Chairman of that Committee, said to Mr.


Drinkwater—he having put his very persuasive evidence before us, arguing that the compulsory powers should be granted—
If I may say so, nobody could have been more persuasive, but even your powers of persuasion cannot convince us. We do not feel that these powers are necessary.
We having sat on that Committee, recognising the considerable powers that were being sought, and then rejecting the application, why should we now in some way be undermined by a Bill that does the very reverse and allocates those same powers to Sealink—and, more dangerously, to the successors of Sealink, recognising that Sealink will be sold off under other legislation that is before the House?
I am one of those hon. Members who feel that there is a danger in allocating to nationalised industries and publicly owned companies considerable powers of compulsory purchase. I am told that this is a procedure that is brought before the House for ratification, has been brought on a number of occasions in the past, and will be brought on a number of occasions in the future.
I am particularly appalled, as my hon. Friends must be, by the prospect of a private enterprise company—despite there being some shareholding in that company by the State, albeit a minor one—being given extensive powers, real powers, and the kinds of powers that should not be allocated to a private institution in a democracy.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke): I intervene in a debate on what is a Private Bill in order to give a brief indication of the Government's reaction—and no more than that—to the various parts of the Bill.
The Bill is, of course, in the hands of my hon. Friend the Member for New Forest (Mr. McNair-Wilson), who is acting as its sponsor, and who will no doubt help to steer it through the House in his usual capable way. I join in the congratulations to him on the usual lucid and persuasive explanation that he gave of the various provisions in the Bill.
My hon. Friend began with a few words setting out his general views on the present position of the railways, and endorsing the request made to us by the British Railways Board for investment in electrification of an extensive part of its system. My hon. Friend and I both know that we cannot go too far into that this evening, but I am sure that he welcomes the fact that matters have advanced on this front. The Government and British Rail have now published the results of the joint study that we carried out into the prospect of electrification of a large part of the network. As my hon. Friend knows, the Government are now to consider the case for electrification, and we hope to announce our conclusions in a few months.
My hon. Friend will know that the Government share his desire to see a modern and efficient railway network in this country. We believe that that involves taking a view on the future investment needs of the railway. Indeed, we have protected the investment of the railway throughout the recent difficult financial period.
The future of the railways depends in part on a correct assessment of their investment needs, and in part on the railways themselves in improving their productivity, reducing over-manning and improving their own business performance:, so as to make a proper contribution to their own investment needs.
I should like now to touch briefly on some of the items that have been raised this evening and which will obviously be of concern to those who examine the Bill at later stages.
Work No. 1 is the proposed sidings for Thames Nitrogen, and I was not surprised that my hon. Friend the Member for Hornchurch (Mr. Squire) intervened and gave his views. He has apologised to me, Mr. Deputy Speaker because, like me, he was surprised by the length of time that the debate has taken, and was not able to stay. I know of his very considerable concern about the prospects that the new railway might pose for a road diversion that he would like to see built across the A13.
At this stage, I want only to say, on behalf of the Government, that obviously the transport of ammonia by rail wherever possible must have considerable attractions to us all, and in principle the transfer of this sort of traffic from road to rail appears to be very desirable. No application has yet been received for a section 8 grant for this traffic, but obviously this is the kind of thing that would be eligible for a section 8 grant if the customer could make out a case for it. But there is the particular problem of the routeing of the road improvements which need to be made to the A13 through the village of Rainham.
My hon. Friend the Member for Hornchurch expressed in very strong terms his belief that that road should be improved, and that a route should be followed across Rainham marshes. He reminded me of a deputation that he brought to me on the subject in December 1979, and he described it as the most important issue in his constituency. Not only has he brought a deputation to see me but he has pursued me in and out of formal and informal meetings on every occasion that has presented itself to him. on the subject of the A13 improvement, ever since he has been in the House. I am only too well aware of his strong concern. He has presented to me the case for the diversion of the road across Rainham marshes, which he believes would be an improvement from the traffic point of view, taking traffic: out of the village of Rainham and also enabling a very considerable acreage of derelict land to be opened up for industrial development in the most efficacious way.
I have been promising my hon. Friend for a considerable time a final and definitive decision about the routeing of the road improvements that are undoubtedly needed to this stretch of the A13. I was impressed by and sympathetic to the case that he put to me, but in the end the Government as a whole will have to decide it. We are taking some time to study the matter because the route that my hon. Friend and his constituents would prefer has considerable cost implications and is more expensive than the on-line alternative that the previous Labour Government appeared to prefer.
Meanwhile, I share my hon. Friend's anxiety that no decision about the building of a railway line on the marshes should at this stage prejudice the possible choice of the right route for the road improvement on the A13. It would be most unfortunate if my hon. Friend were to be left waiting for a decision about the road improvement and meanwhile the whole matter were to be taken out of our hands because British Rail was putting a new private siding along a line which prejudiced potential improvements to the line. My hon. Friends the Members for New


Forest and for Hornchurch discussed the matter this evening, and obviously they will discuss it further at later stages of the Bill.
It is also clear that the Bill will take some time to get through the House, so perhaps the best contribution that I can make is to try to ensure that a final decision on the improvement to the A13 should be taken by the Government before the Bill has completed its passage through Parliament. I assure my hon. Friends that I shall make every effort to ensure that the final decision is reached before the Bill has left Parliament. I shall do everything possible to ensure that such a decision is made. If the decision were to proceed with the Rainham marshes route of the various alternatives suggested for improvements to the A13, it would be necessary to reconsider the whole subject of the building of the railway sidings and the route that it might follow.
The Government are in a completely neutral position, fortunately, on Work No. 2, which concerns my hon. Friend the Member for Luton, West (Mr. Carlisle). I am familiar with Luton town though I have never been to Kenilworth Road. I saw the club's one and only cup final match, when, I am glad to say, it lost to Nottingham Forest. I suppose that I should now be slightly prejudiced against Luton Town because it recently beat Notts County in a key promotion game at Meadow Lane. I shall leave that light-hearted side. Our role is to consider the road proposals if the county council brings the proposal forward and applies for grant or if there is a public inquiry into the compulsory purchase orders needed.
It is a county council proposal. At this stage the Government may be involved in making decisions about public inquiries at later stages, though I cannot give a definitive opinion at present. I take my hon. Friend's speech to be support for the road which I understand is desired by his constituents. It seems to me that it will be eligible for transport supplementary grant and I shall bear his views in mind if anything comes to my Department in connection with it.
I hope that a solution will be found as the Bill passes through the House. I am encouraged to hear that my hon. Friends the Members for New Forest and for Luton, West believe that they will be able to reach an understanding. I listened to the comments of my hon. Friend the Member for New Forest arising from the provisions for the Steventon level crossing, which is again a matter on which the Government can take no view. The previous Secretary of State took a decision in 1977 that a revocation order was not justified. The Ramblers Association is petitioning against the closure, but I have taken note of my hon. Friend's views about the safety of crossings on high speed lines. He believes that we should take a general power to close footpaths in those circumstances. I shall consider that. He suggests that it might be put into the Transport Bill this year. I am sure that the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) and myself feel that the Bill has quite enough in it already. As we passed the guillotine motion on the Transport Bill yesterday, I do not believe that the Government will be making new proposals this year on footpaths across railway lines.
The proposals for a train ferry terminal at Parkeston Quay is the most important part of the Bill. The Bill gives extensive powers to the board and to Sealink to carry out certain improvements in and around Parkeston Quay. The

most important part of those works is connected with British Rail's desire to construct a new train ferry terminal at the western end of Parkeston Quay which is linked with its desire to use a new generation of jumbo train ferries to carry freight across to Zeebrugge. I am sure that in principle everyone wants to see British Rail develop its freight business and more of our international freight carried by rail. The West German Government shares our desire to see more international traffic between Britain and West Germany, by train whenever possible.
My right hon. Friend has been considering an application by the board for consent to invest in jumbo ferries. He has already approved the board's proposals in principle. The final go-ahead will be subject to a review that the board is carrying out at his request into the whole project because, among other things, the freight business is in such a sorry state that there is doubt about its ability to sustain investment. Nevertheless, we are sympathetic to the whole idea of the new jumbo ferry provision.
My right hon. Friend's consent will also be required even if Parliament grants the powers that are sought in the Bill. He will have to give consent under section 9 of the Harbours Act 1964 before all the work can be carried out. It would be sensible for my right hon. Friend to consider the section 9 application for the terminal in conjunction with his decision on investment in the train ferry. We hope that in the end a full examination of the project will enable my right hon. Friend to come to a favourable conclusion and give the go-ahead to the improvement in rail freight links between Britain and the Continent.
The hon. Member for Holborn and St. Pancras, South tempted me to stray to debates that we had until this morning at interminable length in Standing Committee on the Transport Bill. He re-opens the question of whether it is right to give limited powers to Sealink UK Ltd. if and when it becomes a private sector company. The major powers are given to the British Railways Board. The only part of the Bill which gives powers to Sealink is a comparatively small work involving an extension at Parkeston Quay. I suggest to the hon. Gentleman that whether it is a good idea to have an extension of Parkeston Quay should be a judgment about its commercial desirability, the needs of the travelling public and the needs of Sealink's business. The argument that the extension to Parkeston Quay is good if a nationalised industry is doing it but bad if a private company is carrying out the same extension is difficult to follow. The hon. Gentleman is guilty on this occasion of being dogmatic and, perhaps, of being carried away by opposition upstairs to the provisions of the Transport Bill.
Our clear policy under the Bill is that, once the necessary powers have been taken, Sealink UK Ltd. will become a private sector company because the British Railways Board will be enabled to dispose of a substantial and controlling interest in that business. But it is precedented for private companies to have powers of that kind. I hope that those who consider this part of the Bill will form a judgment about the wisdom of extending Parkeston Quay and not get bogged down in the obsession of the Labour Party that investment of that kind is good only if a nationalised industry carries it out.

Mr. Dobson: Generally the Under-Secretary of State is courteous when replying to a debate because he responds


to points made instead of to points which have not been made. However, on this occasion he has strayed in the direction frequently taken by the Secretary of State.
The argument is not that the circumstances are different but that we believe that, if the House is to approve the giving of compulsory purchase powers to a public sector body which is ultimately responsible to the House, that should be explicitly set out in the Bill. The promoters of the Bill should be explicit and spell out that the power might be transferred to a private company. There is a significant difference between the House giving powers to a public sector body and giving them to a private sector company.

Mr. Clarke: The significance is not as great to me as it is to the hon. Gentleman. I accept the statement of the promoters, for which I am not responsible. It might be taken over by events since it describes Sealink UK Ltd. as a wholly owned subsidiary. The Government had no part in drafting that statement. The Government policy is that Sealink will, in the near future, become a private sector company and be no longer a wholly owned subsidiary of British Rail.
I accept that that must be borne in mind when considering the Bill and whether it is right to give such powers. However, I hope that a decision will be made about whether it is a good idea to have the extra transport facilities that will arise if powers are given to construct a quay extension. I do not believe, as the hon. Member for Workington (Mr. Campbell-Savours) implied, that it is always wrong to give such powers to private sector companies. I shall not dwell on the Felixstowe matter, which hon. Members have already decided upon as is their right and duty. We should not have built the railway system, nor half the docks in the country, if we had denied the right to use compulsory purchase powers for such major public works. The fact that the situation has been overtaken by events will not make much difference when deciding whether that is desirable.
In Committee on the Transport Bill I have undertaken to re-examine police powers to ensure that there are no general dangers. British Transport police are employed by British Rail. They are kept apart from local authority and the Metropolitan police because of the nature of railways and ports undertakings. It appears that the British Transport police will continue to police all the docks owned by Associated British Ports, the new statutory corporation that soon will be wholly owned by a private sector company once the Transport Bill policy is put into effect.
The same policemen with the same powers will patrol the same docks and carry out the same duties. I am not convinced that the public interest is threatened if the ownership of the equity changes. However, I appreciate that it is a view. Perhaps it is best pursued in discussions on the Transport Bill.

Mr. Don Dixon: If the British Transport police are transferred to a private company with powers of arrest, other companies which employ Securicor and other security organisations will want the same powers for their men who patrol their premises. That is the danger of transferring such public assets. What will happen if there is a strike and picketing takes place? Any power that British Transport police has in that connection will be transferred to private hands. That is what worries us.

Mr. Clarke: I can well understand that many hon. Members would be anxious if it were thought that we were paving the way for private companies to acquire police powers for their own security operations. My right hon. and hon. Friends who are Ministers in the Home Office would have to answer for that. I can only say that, so far as this part of the Government is concerned, that thought never crossed its mind when drafting the Transport Bill. I hope that I shall be able to assure hon. Members serving on the Standing Committee on the Transport Bill that we are not paving the way for private police forces, that we are merely preserving the existing transport police in docks and that we shall look at the implications of denationalisation for them.
There has been a general welcome for the proposal that penalties should be increased for certain offences on the railway and particularly for carrying alcohol on trains. It would be welcomed by the Government. Certain of my hon. Friends have tabled such an amendment to the Transport Bill. I believe, however, that it has been ruled to be outside the scope of the Bill and that it has not been selected by the House authorities. Perhaps someone will have a go in the House of Lords, which is not so restricted by the scope of the Bill. If such an amendment were to be pressed on the Transport Bill in the House of Lords, it would be favourably received by the Government.
A race may develop between those endeavouring to put such a provision into the Government's Transport Bill, on the one hand, and the promoters of this Private Bill, on the other. On that point, I abandon my neutrality and say that the Government hope that, in one piece of legislation or another, these increased penalties will be provided. All too often, unfortunately, unpleasant experiences are suffered by passengers when people having drink problems get on to trains. The penalties have been overtaken by inflation. It is time that they were brought up to a more realistic level.
I hope that I have given adequate indication of the Government's views. We shall follow the progress of the Bill in its later stages with interest.

Mr. Patrick McNair-Wilson: With the leave of the House. Mr. Deputy Speaker, I should like to respond to some of the points that have been made. I welcome the remarks of my hon. and learned Friend the Under-secretary of State for Transport. To some extent, I am faced by a dilemma. The promotion of the Bill and its juxtaposition with the Transport Bill have created problems that have been aired by the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Workington (Mr. Campbell-Savours). My hon. and learned Friend has helped to clear up this dilemma.
The hon. Member for Workington and I find ourselves more often involved in discussions on the steel industry. I assure him that in this situation there will be no intention for British Rail to give free services to a competitor. I undertake that the matters to which reference has been made will be examined thoroughly. We should be honest. The Transport Bill is not yet law, and British Rail has to get ahead with this type of legislation because it affects so many aspects of its activities. I hope that with the assurances given by my hon. and learned Friend we can leave the matter there and try to separate the promotion of legislation for one statutory body from the wider political context of the Transport Bill.
My hon. and learned Friend referred to the routeing of the A13. I can only ask him to be as swift as he has promised. This has been a very long playing record. Many people have been waiting for a long time for the Department to give its determination. I am glad that my hon. and learned Friend has not asked the board to take this clause out of the Bill. The work is important. The welcome given by my hon. Friend the Member for Hornchurch (Mr. Squire) on safety grounds should be enough for us to try to press ahead as quickly as possible to get goods off the road and on to rail. I would have thought that this was a good example.
My hon. Friend the Member for Luton, West (Mr. Carlisle) has given a detailed account of some of the worries and anxiety expressed by the Luton football club. I recognise that he has no wish that the road project should be delayed or dropped from the programme. That would be the worst thing that could happen. I should like to deal with some of the comments that my hon. Friend made. They clearly reflect the views of the football club. The other individual groupings to which he referred, like the cold store, have not made objections. If the line of route were to be moved substantially to the south, we would be talking about the demolition of factory buildings. It is therefore common ground that the alignment that has been selected is the preferred.
My hon. Friend said, perhaps inadvertently, that the intention was to demolish the Kenilworth suite. That is in no sense the intention of the British Railways Board. Plans exist to raise the suite in such a way that trains can pass under it, and the important facilities that it provides will continue to exist.

Mr. John Carlisle: Technically, the Kenilworth suite as it is today would have to be demolished. My hon. Friend

is right in saying that proposals have been put forward for the building of a new suite but, by the very nature of the architecture of the suite, it would have to be demolished and raised again, with a cantilever type of erection. I think that I was technically correct in what I said.

Mr. McNair-Wilson: I am advised that it can be relocated. I note what my hon. Friend says and I am sure that those who are concerned in these matters will also note his comments. This matter can be discussed later, and I assure my hon. Friend that it will be.
The training and parking facilities about which the club is concerned can also be accommodated. I do not want to strike a sour note. The club has facilities for accommodating 22,600 people, but I am advised that it is very seldom that more than 10,000 are present at any one time, even for a home match. There are seldom more than between 12 and 14 coaches to be parked. It is therefore the belief of those concerned that facilities can be made available to take account of that level of parking.
Anxiety has been expressed lest the club's safety certificate is endangered. I am advised by the county council that this is unlikely and that there is no need to regard that as a worry.
In reply to my hon. Friend's detailed speech, I assure him that it is the board's desire to find a happy accommodation with the club to make sure that, as far as possible, it is satisfied with the facilities that are given. With that assurance and the other assurances given by my hon. and learned Friend the Under-Secretary of State, I hope that we can allow the Bill to go forward to its next stage.

Question put and agreed to.

Bill accordingly read a Second time and committed.

Local Government, Planning and Land (Northern Ireland)

The Under-Secretary of State for Northern Ireland (Mr. David Mitchell): I beg to move,
That the draft Local Government, Planning and Land (Northern Ireland) Order 1981 which was laid before this House on 29 January, be approved.
Despite its title, the order is not a carbon copy of the Local Government, Planning and Land Act 1980. Much of what is contained in that Act is of no application to Northern Ireland. For instance, the different structure of local and central administration in the Province means that many provisions of that Act, for instance, the new block grant system, are of no relevance to Northern Ireland. There are also other matters covered by the Act where further consideration of the specific implication for Northern Ireland is required before we decide whether to bring forward legislation.
Before I go on to explain the contents of the order I should draw hon. Members' attention to the fact that four additional articles have been added since the order was first published as a proposal. These additional articles are all valuation and rating matters and would empower the Department of Finance, first, to vary by order the amount recoverable in respect of rates pending disposal of an application for revision of a new valuation list; secondly, by order to vary the amount of certain allowances payable to an owner rated instead of the occupier; thirdly, to extend the right to a reduction of rates on a dwelling house to a private garage and private storage premises; and, fourthly, to provide rating exemption for fish farms. These articles correspond to late additions to the Local Government, Planning and Land Act 1980; additions that we decided should also apply in Northern Ireland.
The rating and valuation provisions in the order correspond to provisions in part V of the Local Government., Planning and Land Act 1980; the planning provision in relation to fees corresponds to provisions in part IX; and the provision for new town land disposal corresponds to the provision in part XV.
Apart from articles 1 and 2 which are introductory, article 3 amends article 12 of the Rates (Northern Ireland) Order 1977. Hon. Members will recall that it is under that article that the amount of rates recoverable pending disposal of an application for revision of a new valuation list and any subsequent appeal is limited to the amount last levied plus half the difference between that amount and the amount of the new charge. The new article will confer power for the Department of Finance to vary the amount by order.
Article 4 makes provision to enable the Department of Finance to vary by affirmative order the percentages of allowances to owners who are obliged to pay rates on property occupied by others, or who do so by agreement. Under the existing provisions of articles 20 and 21 of the 1977 rates order, the allowances are at fixed percentages.
Article 5 extends domestic rate relief to private garages and private storage premises that are physically separate from dwellings. Article 27 of the 1977 rates order at present limits this relief to dwellings.
Article 6 amends article 29 of the Rates (Northern Ireland) Order 1977, which gives the right to domestic ratepayers to pay rates by instalments. The proposed

article would extend the right to pay rates by instalments to non-domestic ratepayers and, in particular, small businesses—and it is this small-business concession that was contained in the mainland legislation: that is, for property that is valued within lower and upper limits to be specified in an order subject to affirmative resolution. The precise figures of valuation used in the Great Britain legislation are £100 to £2,000, and we are proposing to use the same.
Article 7 amends article 39 of the Rates (Northern Ireland) Order 1977 to make provision enabling the Department of Finance to prescribe by subordinate instrument a reference date to which net annual values assessed in the course of future general revaluations of specified hereditaments shall notionally relate and to prescribe that in relation to specified or unspecified hereditaments the rateable value shall be arrived at by methods to be set out in subordinate legislation.
By way of further explanation, as I have been using the technical terms, in order to ensure that those who have to interpret the subsequent legislation are fully aware of the precise details, I should say that this enables partial revaluation of classes of property but does not allow a class to be disadvantaged. Obviously, hon. Members will have in mind the relative positions of a domestic and a non-domestic hereditament.
Article 8 amends article 45 of the Rates (Northern Ireland) Order 1977 to relieve the commissioners of valuation of the obligation to publish a new valuation list every five years and substitutes a power to have a general revaluation at dates to be prescribed by the Department of Finance by subordinate instrument—which means that it is subject to prayer for annulment.
Article 9 extends existing rating law to the effect that occupiers of fish farms will be exempted from liability for rates on such properties on the same general basis as occupiers of agricultural land. Perhaps here I should remind hon. Members that in Northern Ireland a fish farm is treated as an industry and that therefore it will move from 60 per cent, derating to total derating from 1 April.
Article 10 of the draft order authorises the Department of the Environment for Northern Ireland to make regulations prescribing charges for any application or appeal under the planning legislation. The Government consider the reduction of public expenditure as one of their most important tasks. If, therefore, services that in the past have been paid for out of the public purse are to continue, an alternative source for part of the cost must be found. The provision in article 10 would be used to prescribe charges to meet part of the cost of the development control system. Similar powers were provided for the remainder of the United Kingdom in the Local Government, Planning and Land Act 1980. It is intended to prescribe a scale of fees for applications for planning permission and for consent to display an advertisement.
There will be no fee for an application for a determination whether planning permission is necessary. Nor will the new charges apply to applications for listed building consent or to planning appeals. A consultation paper outlining proposals for the new planning charges has recently been published and comments have been requested by 15 April. The scale of charges proposed will be in line with the reduced fees prescribed in the regulations for Great Britain which were approved by the House on 3 March 1981.
It may be helpful for the House to know that a consultation paper on relaxing controls on the size of extension that requires planning consent is now out for comment. That must be taken into account when considering the additional charges that arise under article 10. In other words, many of the smaller applications that in the past would have required planning consent, and therefore incurred fees, will not now do so.
In article 11 the opportunity is taken to raise the current maximum for some fines under the Planning (Northern Ireland) Order 1972 from £400 to £1,000. I think that hon. Members will approve of that. Those increases give parity with the higher penalties provided in Great Britain under the Criminal Law Act 1977. Only the more important offences are involved—for example, failure to comply with enforcement and stop notices, tree preservation orders and unauthorised demolition or alteration of a listed building. Since the fines were set in 1972 they have become less effective as a deterrent and the new maximum of £1,000 should ensure a more realistic penalty. I confirm that enforcement arrangements in the Province are the same as those on the mainland.
Article 12 of the draft order deals with disposal of land in Northern Ireland's new town areas of Antrim, Ballymena, Craigavon and Londonderry. Land for those new towns was acquired largely between 1966 and 1969, in accordance with the initial plans and projections of future increases of population for these towns. Actual progress, except perhaps in the case of Antrim, has been at a much slower rate than originally expected and present trends suggest that the ultimate populations of the new towns will be significantly lower than the original forecasts, again with the possible exception of Antrim. In consequence, less land will now be required and land identified as surplus to planned needs will be available for disposal.
Article 13 confirms the Belfast city council as the owner of two industrial estates, namely, the Balmoral and Duncrue Street industrial estates. It will regularise an existing position under which the council took responsibility for promoting the development of the two estates, both of which were acquired by the former Belfast county borough council under various enactments. They have been operated by the present city council since reorganisation on 1 October 1973, on a profit-making basis. The legislation will also confer power on the city council from 1 October 1973 to manage these estates and a small area of land adjacent to the Balmoral estate acquired in 1974.
The powers being taken are not of a general kind and limit Belfast city council's responsibility to develop and manage industrial estates to the lands at Balmoral and Duncrue Street. It is not the Government's intention to extend the powers of other councils in Northern Ireland to acquire and develop land for industrial or commercial purposes, this being the function of the Department of Commerce. There is a need to obviate some uncertainty about lands that were acquired by the former corporation before the existing city council came into being.
The draft order is of modest length and of no great complexity. It seeks generally to bring Northern Ireland into line with Great Britain. I shall be happy to help hon. Members on points of clarification.

Mr. J. D. Concannon: First, I congratulate the Under-Secretary of State on the way in which he has elucidated some of the order's more intricate details. I do not intend to detain the House for long. Most of the provisions deal with local government and it is only fair that the representatives of the people of Northern Ireland should have the maximum opportunity to debate these issues.
I have several questions to put to the Minister on the powers to be granted to the Department of the Environment by certain articles. They demand clear and open answers from the Minister so that those who are in possession of property that they want to improve may know where they stand.
I am concerned that under the new article 105A the Department of the Environment may
make such provision as it thinks fit for the payment of a fee
for planning applications and appeals. I do not know whether I misheard the Minister, but I thought that I heard him say that he was not contemplating a fee for appeals. In Northern Ireland we have the Planning Appeals Commission, a body which does not exist anywhere else in the United Kingdom. It seems that article 10 makes provision for article 105A(6) of the 1972 order to include a fee for appeals. The Opposition have always been opposed to the principle of charges for planning permission.
I have always regarded the Planning Appeals Commission as a body that provides the opportunity for the law to be seen to be done. I accept that some might have taken advantage of the procedure. However, those who feel that the Department is riding roughshod over them have been able to turn to the commission. I should hate to think that payment to the commission will put the appeal system out of reach of many in Northern Ireland. If I have misunderstood the Minister, I shall be happy to be corrected.
This is an intricate and complicated piece of legislation. I hope that every effort will be made to elucidate the changes so that the people of Northern Ireland will be fully informed of their rights under the law. I think it best to resume my place and allow those from Northern Ireland who represent the people to get on with the job.

Mr. J. Enoch Powell: This is an order of considerable width and scope, and of considerable importance. I am afraid that it is possible to consider it satisfactorily only by taking the separate articles one by one, as I fear I shall trouble the House by doing in a moment. I shall make two procedural observations by way of a preface.
In the first place, as the Minister conceded, the order as laid is considerably larger—it is larger by four articles—than the order previously laid in proposal form, accompanied by an explanatory memorandum. When it was relaid in its extended form there was no consultation process of the ordinary character and no explanatory memorandum accompanied it. Consequently, hon. Members confronted with the draft order in its present form were without any guidance or assistance as regards the reasons for and meaning of the new articles in the order. Therefore, I believe that that procedure should be avoided if possible in future. The Minister was most


courteous and helpful, when he recognised what had occurred, in obtaining a stay of execution for hon. Members so that we might come to tonight's debate better prepared, and in providing us with some elucidation on the number of new clauses which we had not previously seen.
The procedure by way of proposal is not an absolute statutory requirement, but I think that it is a procedure which, as long as we must have legislation for Northern Ireland by Order in Council, all concerned—public and Members of Parliament—find valuable. I hope that in future Departments generally will be scrupulous, when there is major change in an order, not in consequence of parliamentary proceedings, but as a consequence of decisions taken outside Parliament, in proceeding ab initio by means of draft proposals plus an explanatory memorandum. I believe that that plea already has the sympathy of the Minister. It would be helpful if he would confirm that impression which my hon. Friends and I have when he winds up the debate.
My second procedural comment goes somewhat further. The original explanatory memorandum said—the same words verbatim somehow got into the Minister's speech this evening—that much of what was contained in the England and Wales Local Government, Planning and Land (No.2) Bill
is of no application to Northern Ireland circumstances … because of the considerably different system of public administration".
It turns out from the order, both in its first form and in its second form, that there is a considerable part of that England and Wales Bill that is of application to Northern Ireland, and is being applied to Northern Ireland. As the notes indicate, and as the Minister's remarks indicated, it is being applied to Northern Ireland more or less precisely as it was applied to England and Wales in the Act that was passed Last Session.

Mr. David Mitchell: Mr. David Mitchell indicated assent.

Mr. Powell: I have the Minister's assent to that.
I am afraid that this is not the first time—it may not even be the last time—that I remark how much better it would be if Northern Ireland Departments would keep in touch with their opposite numbers on the mainland at a much earlier stage in the preparation of legislation, and not wait to start thinking about Northern Ireland until the England and Wales legislation has been passed. There is no reason whatsoever why, from the earliest stages of the preparation of the Local Government, Planning and Land Act for England and Wales, the Department of the Environment should not have been looking at it carefully and saying"Bless my soul, it is quite likely that some of this will be applied to Northern Ireland". If the Northern Ireland Departments found, as they have now found, that there were about a dozen matters that should apply, and should apply identically, to that part of the United Kingdom, what on earth could be the objection to their saying to their colleagues on the mainland"Would you kindly arrange for that part of your Bill to apply to Northern Ireland"? That would have saved the House the trouble that it has tonight, it would have saved the repetition of the same explanation and, what is more, it would have enabled my hon. Friends and myself to participate in the debate in principle on many of these matters in the previous Session.
I refer briefly to fees. I have considerable sympathy with what the right hon. Member for Mansfield (Mr.

Concannon) said. It is a serious matter for debate whether fees should be charged for planning applications and what are the theory and morality that lie behind such a proposal. I am sure that that was debated in the context of the England and Wales Bill. Had my hon. Friends and I sought to take part in the debate in the House or in Committee, the general feeling would have been"What business was it of yours?" Our attention would speedily have been drawn to the statement that that part did not apply to Northern Ireland.
The Minister shakes his head. Of course we have the technical right, which we sometimes excercise, to be heard on legislation which, on the face of it, does not apply to Northern Ireland; but I have a suspicion that, had we discussed the matter in the light of Northern Ireland conditions, the occupant of the Chair would have been fully within his rights in calling us to order.
Now, faced with the order, we are told that the Department of the Environment has concluded that the same should apply in Northern Ireland. We are placed in a quandary. Either we have to debate the matter for ourselves in principle—incidentally, without the possibility of amendment—and come to our conclusion, with a Division presumably if we disagree with the Government, or we have to conclude, as I imagine my hon. Friends do, that, as the principle has been accepted on the mainland, we had best fall in line with it so that there may not be: inequity and disparity between citizens in identical circumstances in two parts of the Kingdom.
What I am about to say does not come as news, but it bears repetition and will be repeated. Indeed, it is in the interests of the Government and the House that it should be understood and accepted. Wherever possible it should be foreseen whether mainland legislation is regarded as applicable to Northern Ireland, and that application should, if possible, be made in the initial legislation so that hon. Members representing Northern Ireland can take part from the beginning, with full rights, in debate and in establishing what the law is to be.
After that double preface, I come to consider the operative and substantive articles of the order in succession. As the Minister explained, and as appears on the face of the article, the purpose of article 3 is to enable the Department to vary, subject to negative resolution, a fraction which at present stands in the law as half for the purposes of the Rates (Northern Ireland) Order 1977. The Minister did not explain—and I simply injected the monosyllable"Why?", which he failed to hear—why the Department should want to vary the fraction of a half as it stands in existing law. If it wants to vary it, why does it not say what fraction it considers right? This is not a quibble. I can quite understand that if the existing law specified a particular figure, such as a sum of money, it might be reasonable, given the continuance of inflation—despite this afternoon's Budget—for the Government to have powers to vary the figure by order, but this is a fraction. As a fraction, so far as I can see, it will be unaffacted by inflation or other economic changes.
It is therefore necessary for the Minister to justify his contention that, although the 50 per cent, fraction is specified in the existing law, the Department should be able to change it to three-quarters or one-quarter. Indeed, I hope that he will go further and disclose whether the Department actually entertains any such intention and, if it intends to alter the fraction of one-half, in what direction it intends to alter it and for what justifiable reason. Will


the Minister, when he winds up the debate, therefore please be more candid about the purposes and intentions behind article 3?
The same objection, or at any rate the same query, applies to article 4. Article 4 makes provision for the Department, by order, to alter a percentage mentioned in the Rates (Northern Ireland) Order 1977. Why should it wish to alter a percentage, once fixed? Has anything happened in the costs of rate collection, or whatever it might be, relative to the level of rates, which would justify a change in the percentage? And does the Department in fact have any such intentions of which our constituents might be made aware?
While the Minister is directing his mind to answering, as I am sure that he will, my queries on articles 3 and 4, I must point out that the safeguards that these articles import are by no means what they might appear to be to any innocent hon. Member from the mainland who, whether waiting for the Adjournment debate or otherwise, may be present on this occasion.
Such a Member, having provided himself with a copy of the order, and seeing the words"subject to negative resolution", might conclude that we could pray against the order. Similarly, looking at article 4 and seeing the words"subject to affirmative resolution", he might conclude that a debate would have to take place upon an affirmative order. He would be mistaken. We have to carry out that transposition, if I may use a musical term, which must always be applied in dealing with these orders. For"negative procedure", read"no procedure at all", and for"affirmative resolution", read"negative procedure".
In other words, the Department will be quite uncontrolled in whatever it does under article 3. Under article 4 it will be controlled only to the following extent. The previous Administration—and I trust that the same applies to this Administration—by a concession, agreed that, if possible, it would accept, though preferably for handling in the Northern Ireland Committee, a prayer against an affirmative Northern Ireland order. But so rare is it in these enlightened days for even Great Britain prayers to be debated that Members from Northern Ireland would obviously be chary of asking on each successive occasion that the Government should provide time and organise a sitting of the Northern Ireland Committee in order to hear the equivalent of a prayer. Therefore, although there is parliamentary procedure to control the powers taken by the Department in article 4, it is parliamentary procedure which is extremely difficult to use, and which in practice is used only when matters of considerable public importance are involved.
I pass from articles 3 and 4—leaving aside articles 5 and 6, which we welcome—to article 7. Article 7, although it was in the original order and received a cursory reference in the explanatory memorandum thereto, is of such inspissated obscurity that even with the assistance of both documents I must confess that it defeated myself and my hon. Friends. We have succeeded in attaining to some degree, though only a partial degree, of enlightenment only as a result of a two-and-a-half-folio letter which the Minister was kind enough to send to us at the end of last month.
I think that some dim notion of what it is about has, as a result of this, dawned upon my mind. Let me try. I think that the idea is, first, that instead of the date of the new

valuation list being the assumed date at which the properties in it are to be valued, an earlier, and therefore more realistic, date to which the valuation is to relate will be specified. For example, if the new valuation order is to come into effect from April 1984, one would specify a date, say in 1982, as the valuation date, so that the valuers would be working upon real or nearly contemporary values, instead of having to speculate upon movements in the economy over the next two or three years.
I seem from various signs and winks to have done fairly well so far. So I approach with some encouragement the more difficult part, which is to be found in the latter half of the article. I think that I understand that during the currency of a particular valuation list it is intended to take hold of a group or class of hereditament. That may be specified or unspecified. However, in this context I think that those words are not what they seem to mean, but are terms of art. At any rate, it is intended to take hold of a specific class of hereditament and revalue all hereditaments of that kind. All of them having been revalued, the global valuation will then be scaled down to what was the global valuation of those hereditaments in the existing list.
The result will be that the relativities between those hereditaments may be altered and modernised, but the relativities between all hereditaments of that class, on the one hand, and all other hereditaments, on the other, will remain unaltered.
I seem to be getting the most encouraging signs from the Minister. Therefore, I shall now put to him the difficulties that I find. They are to understand for what purpose this second operation, which I have attempted to describe, is intended to be engaged in. For example, do the Government feel that the relative values of domestic hereditaments are getting out of date faster than the relative values of non-domestic hereditaments? Is that what is wrong? If so, will they please say?
In the note with which the Minister kindly supplied us he says:
The distinction between domestic and non-domestic hereditaments is not specifically provided for in the draft order, although in practice it is this distinction that would most likely be made.
That illustrates the importance of the attention that hon. Members pay to these orders, apparently of a technical kind, when they come before the House. How wrong we would be to treat these orders on a take-it-or-leave-it and semi-formal basis. At about the third time of asking—he will appreciate that this is no personal criticism—the Minister said that it is quite likely, although not certain that it will happen, that if we use these powers we would be concerned with the distinction between domestic and non-domestic hereditaments. I hope that he will not think it unfair that hon. Members should ask him point blank whether there is any intention to take out domestic hereditaments and revalue them in this way. If so, what are the reasons for doing so? If it is some type of non-domestic hereditament, what type of non-domestic hereditament, and for what reasons? In other words, will the Minister, true to his nature, display a candour towards hon. Members and the House which is noticeably absent from what are called the explanatory memoranda which have hitherto accompanied these documents?
That brings me—the subject of valuation lists is common to these two articles—to article 8. Article 8 is the Northern Ireland version of a well-known and regrettable"Rake's Progress". My hon. Friends and I have the


greatest objection to article 8. Whenever Governments, at intervals of about a quarter of a century, screw up their courage to the point of having a new valuation for rating, they are full of good intentions. When they do that, they always say"And of course, from now onwards we shall revalue every five years". But before the quinquennium is very old their courage begins to ebb and so the Rake's Progress starts whereby quinquennium after quinquennium the same old valuation lists go on until sooner or later the situation becomes intolerable. Then—and this is the human point about this—all unawares, ratepayers are brought up against the consequences of the economic changes that have taken place, sometimes over 25 years.
It is not fair that the ratepayer, who recognises his duty to pay rates in relation to the relative value of his property at a given lime compared with other values, should suddenly be subjected to the tremendous changes in burden that take place when there is a valuation after a long lapse of time. We therefore believe that, expense or no expense—after all, this is the cost of justice and the price of fairness to the ratepayer—the valuation ought to take place as provided by the law. Indeed, we have more than a recollection of all sorts of good intentions when the order was passed in 1977. No doubt the right hon. Member for Mansfield will be able to recall them himself, although it was not his own Department. I am sure that his late departed colleague at the Department of the Environment at that time would be distinctly aware of the undertakings that were given—that in future there would be a regular quinquennial valuation so that never again would those unfair, unexpected and unreasonable shifts of burden take place.
Here we are, subject to an affirmative order—that is to say, in practice to the unlikelihood of any parliamentary procedure at all—saying that the Department will have power to defer the general revaluation indefinitely. I give notice that my hon. Friends and I regard this as a matter that in itself calls for a debate either in the House or in the Northern Ireland Committee. When such an order is made, we shall pray against it and we shall expect the Government to provide time for a proper debate.
Article 9 refers to the exemption of fish fanning, and it is welcome. It ties in admirably with the new legislation on fish farming—both in the Province and on the mainland—which has just passed through the House.
I turn to a matter that has already been mentioned by the right hon. Member for Mansfield, namely, the imposition of fees for planning applications. Fees will not be charged, as the right hon. Gentleman inadvertently said, for planning permission: a person will pay the fee whether or not he gains permission. That makes it a little more disagreeable. I should like the Minister to confirm that the scale of fees proposed in the paper that he has circulated is identical with that in the regulation for England and Wales, which the House recently accepted. I have done my best to compare the two. Rather uncharacteristically, Northern Ireland has been able to set out the table with greater brevity. As I suspect the Northern Ireland legal department has always thought, Northern Ireland must have better draftsmen than has the mainland. At any rate, we shall be satisfied with the Minister's assurance that the fees—whether right or wrong in principle—will be levied in an identical way on both sides of the Irish Sea.
No proper objection can be made to the increase in fines contained in article 11, because of the fall in the value of

money and because of the complete assurance that the Minister gave to the effect that there would be parity with Great Britain. However, at that point the Minister slipped in a sentence—a significant sentence—when he said incidentally that the procedure for enforcement was the same in Northern Ireland as it was in England and Wales. Thereby hangs a tale, a little of which should be put on the record of the House, because it is a matter of public importance and concern.
It may be—indeed, it must be, since the Minister says so—that the enforcement procedures in Northern Ireland and in England and Wales are identical. However, having some experience of both sides of the Irish Sea, I do not believe that the enforcement procedure works as effectively in Northern Ireland, either as it does in England and Wales, or as it ought to do. In six years I have come across too many cases, far more than I like, of development taking place, either without permission or in contravention of permission or in contravention of conditions, and things then beginning to happen in such a way that eventually a new application was put forward which was granted, which made an honest woman of something that started with a very different character.
I know that the Minister has been made aware of the anxiety that my hon. Friends and I have and that he will direct his mind to ascertaining why, if the legal procedures are identical in both parts of the kingdom, they should apparently produce such different results. Of course, there is a difference in the system of adminstration in the two parts of the kingdom, but that does not necessarily contain the explanation. So perhaps it is not unreasonable, in talking about the fines imposed upon those who are the subject of enforcement, that hon. Members should notify their anxiety about the effectiveness and comprehensiveness of enforcement in Northern Ireland.
Article 12 relates to the disposal of land which is no longer required for the purposes of new towns. The only point that I wish to raise here is to ask for an assurance from the Minister that the Crichel Down rules will apply to those disposals. Of course, the Crichel Down rules are not embodied in legislation in Great Britain, but they are a convention which has been treated as binding upon successive Governments. I have been assured by Northern Ireland Ministers that they are regarded as applicable in identical terms in Northern Ireland. I confess to some unsureness about whether that is absolutely honoured to the letter. However, that is a matter on which my hon. Friend the Member for Londonderry (Mr. Ross) will address the House later with a greater wealth of argument and illustrative material than I can command. I simply leave the query there and express the hope that the Minister will be able to satisfy the House that Crichel Down rules will apply to disposals under article 12.
You will be pleased to know, Mr. Speaker, that the number of operative articles of the order does not exceed the number of 13, and that therefore I have now come to the last.
The explanatory memorandum told us—and the Minister repeated the statement in introducing the order this evening—that"the powers being taken are not of a general kind". I must say that, on reading the article, I find that a very strange statement. If the Minister will be good enough to look at paragraph 1 of article 13 he will see that the power conferred by it is very general indeed. I admit


that it refers only to the corporation, but beyond referring to the corporation it is to all appearance entirely general. It says:
The Corporation shall be deemed always to have had power to hold and develop land as an industrial estate.
If it is deemed always to have had it, I presume that it is deemed to have it.
The rest of the article, I quite understand, is restricted to the treatment of the lands referred to in paragraphs (3) and (5).

Mr. David Mitchell: Mr. David Mitchell rose—

Mr. Powell: Clearly, the Minister has the answer, and if he has, I am willing to accept the discharge at the moment. But he has at any rate grasped my difficulty, which is that apparently article 13(1) is at large, even though the remainder of the article appears to be specific.
The Minister has at least had this advantage under the shower of interrogatives with which I have sprayed him—that, if in a briefer form, they had already been placed at his disposal some time ago. So I hope that he will not feel himself hard done by in being invited, if possible within the limits of the debate this evening, to satisfy them.

Mr. Gerard Fitt: I rise briefly to reinforce the objections by my right hon. Friend the Member for Mansfield (Mr. Concannon) and the reservations put forward by the right hon. Member for Down, South (Mr. Powell) in relation to the principle of the payment of fees for planning applications. This is a completely new departure. We have never had it in Northern Ireland before and I was completely unaware of it until I read the order this evening. I am certain that the general public in Northern Ireland are unaware of the proposed legislation. If they were aware of it they would be objecting to it, as I am objecting to it this evening.
I ask the Minister to tell us the reason for the decision to charge a fee for planning applications. I repeat that it is a new departure for us in Northern Ireland. Has it been found that the existing law has been abused to some extent and that therefore some restriction needs to be placed on frivolous planning applications? Has it been found that the applications dealt with have led to a good deal more work for the staff who deal with this type of application? One would have thought—I speak specifically in relation to Northern Ireland, and more particularly in relation to Belfast—that there would be adequate numbers of civil servants to deal with the planning applications brought to their notice.
I find it very difficult to understand the need for the order. It may be that the Conversative Government are seeking a new means of bringing in revenue, under whatever guise. We know from the Budget Statement today that they will get more revenue by way of taxes on cigarettes, petrol and other commodities, but the provisions in the order seem to be a rather hidden way of trying to get more revenue.
Some of the people concerned may be in very humble circumstances. There are some ordinary people who do not have a great deal of finance behind them but may want to build extensions to their houses. There may have been additions to their families, or they may simply wish to

carry out extensions to their properties. I cannot see why they should be asked to pay a fee to authorities when they make planning applications. The wording of the order says that the authority or Department"may", but we have seen that word before. One often sees it transformed to"shall". I am sure that the word will become"shall" when the order becomes effective.
Have the Government made an assessment of how much money would have been collected for the past year if the proposed fees had been in operation? How much money would have been collected last year, or the year before? How much money will be collected in the forthcoming financial year? If the figure were thousands or perhaps hundreds of thousands of pounds, my party would still object, but the Government might justify it. If the figure were small, it would be utterly unjustified to establish such a principle.
I do not object to that kind of tax under this guise—we have heard enough this afternoon about what the Government will do—but I wholly object to the principle that people should be forced to pay fees for planning applications to carrying out essential improvements to their properties.

Mr. James Kilfedder: I wish to dwell on article 10 of the order and I shall not take much time, because what I intended to say has already been said most eloquently. I want to put on record my objection to the principle of imposing charges for planning applications.
Development is vital for the whole community. Planning authorities perform an essential service, not just for the person who makes an application but for the whole community. It is wrong that the Government should seek to impose charges on a person who makes a planning application when the function of the Department of the Environment is to protect the environment.
As we have heard from the Minister, the reason why these charges are being imposed is to bring in revenue to pay for the bureaucracy which already exists in Northern Ireland. As has been pointed out by the hon. Member for Belfast, West (Mr. Fitt), we had an example this afternoon in the Budget which showed that the Government are out to penalise people as much as possible. Unfortunately, the majority of people who are being penalised are the ordinary men and women in the community. Planning consent is not a privilege. Everyone has the right to make a planning application, but no one may erect or extend a building without obtaining planning permission. Therefore, it is not proper for the Government to charge people for fulfilling an obligation that is imposed by law. That is wrong in principle, and I take strong objection to it. It is necessary to protect the environment and we must, therefore, have proper planning. It is right that plans should be submitted to public scrutiny. We must ensure that a building or extension will not be offensive to residents or the environment.
I concur with the right hon. Member for Mansfield (Mr. Concannon) that the charge for planning appeals will penalise aggrieved applicants. In many cases a charge will deter an appeal. The applicant will have already faced officialdom and had the application rejected. Unless the applicant has plenty of money to throw around, he will have to think carefully before appealing.
That will strengthen the bureaucracy, which is already too strong. We should be curtailing bureaucracy. It is


wrong to give this power to the planning authorities. The measure will add to the cost of buildings for industry, farming and horticulture. That is at a time when in Northern Ireland we need more industry and more people developing free enterprise. More people should be erecting buildings and promoting industry. The order imposes a penalty on that activity.
It also imposes a penalty on ordinary people who wish to build their own home or an extension. Costs are already too high. Many young people find it impossible to meet mortgage repayments. It is wrong that the cost of a home should be increased as a result of the charges.
The planning authorities will gather large sums. I shall be interested to hear exactly how much the Minister expects will be collected. As a result of collecting the large sums involved, officials will have less incentive to maintain efficiency and curtail bureaucracy. The Government will defeat their avowed purpose. There will be an increase in the number of people working in the planning offices and a delay in processing planning applications. I shall regret that.
An applicant will have to pay £20 or more for permission to build a home. As a result he will take time consulting the planning authorities to ensure that he does not throw away his money. He will have to go carefully through the plans with the officials to avoid the official throwing the application out of the window. That will lead to more work. It will mean delay and an increase in costs. In addition, planning officers will have a sanction. They will be able to threaten an applicant who will not give in to demands about where a house should be sited, how it should be built, which way it should face, or the way in which the roof is built. Planning authorities impose many niggling requirements. Some of them do not make sense, although many do. Some authorities are difficult with applicants.
I do not believe that the imposition of charges will bring any improvement in planning in Northern Ireland. A number of cases have been brought to my attention where planning permission has been given where it should never have been given and also a number of cases where planning permission has been refused where I felt it should be given. In one case, where planning permission was given, I felt that it was diabolical that the authorities should grant such permission to a speculator to build a house right in front of an existing house, thereby adversely affecting the value of the house and the enjoyment of the house by the residents. They protested, but there was nothing that they could do.
I should like to refer briefly to article 11, which increases the level of fines under the Planning (Northern Ireland) Order 1972 and the Planning (Amendment) (Northern Ireland) Order 1978. Until now, where someone has defied the planning law in Northern Ireland, the Department of the Environment has seemed impotent or unwilling to enforce the law. I have one case with which I have plagued the Minister and his predecessor where an industrial activity is being carried on without planning permission to the annoyance of residents in the area. I have not yet succeeded in persuading the Department of the Environment to stop that activity and to make sure that the building reverts to its former purpose. I hope that when this order takes effect the Department of the Environment will ensure that the planning law is enforced for everyone.

Mr. Wm. Ross: The measures in the order fall under three headings—valuation and rating, planning, and land. It is rather obnoxious that three such separate subjects, with their roots in separate pieces of legislation, should be bundled together in a single order. I would have thought that for the benefit of everyone concerned it would be better to have three small orders that related more easily to the parent legislation in each case. In future, confusion is bound to be caused to hon Members or others who start to look through the various laws governing valuation and rating, planning, and land to try to find the subject matter that they seek.
I echo the comments of my right hon. Friend the Member for Down, South (Mr. Powell) in drawing attention to the fact that four new articles had appeared between the proposal for the draft and the actual draft. If I had thought that the order could be expanded in the way that it has been expanded, I could have brought up a few more matters to be added to it. There is an embryo transfer centre at Coleraine, about which I wrote to the Minister's predecessor, which is bearing heavy rates. If it were located on this side of the Irish Sea, no such rates would be charged. I would have thought that this was an excellent opportunity to clear up the law and to relieve my unfortunate constituent of the problem that he faces. I would have put that matter to the Minister if I had thought it possible that the order could be extended. I see no reason why it should not have been extended to the producing organisation of fish farms, so closely connected with a new branch of agriculture.
I wish, above all, to direct my remarks to the problems that arise under the powers being taken to dispose of land no longer required for the purpose for which it was originally vested or acquired. This order raises the apparently dormant but hotly smouldering question of the disposal of such land. I am not sure whether the Minister is a willing volunteer or a reluctant conscript. I know that he mounted the horse in mid-stream, and it may be that once he was mounted he found this flaming fire ahead of him. Of one thing I am absolutely certain: heaven help him if he does not get it right.
I assume that the area of land affected in Londonderry city is relatively small, as no one has been able to identify it. There is the problem of Antrim, which my hon. Friend the Member for Antrim, South (Mr. Molyneaux) will raise if he catches your eye, Mr. Speaker. There is the problem of North Antrim, which apparently will not be raised by anyone, and there is the problem faced by my hon. Friend the Member for Armagh (Mr. McCusker), who, unfortunately, is not able to be with us, in relation to Craigavon new city.
That is a hideous problem, and I am keen to know how the Minister will resolve it. Originally the land could be sold only for new town development, but the order alters that. The land can now be disposed of to anyone.
My right hon. Friend the Member for Down, South said that he hoped that the Crichel Down rules would apply. I hope that a much more generous spirit will be shown in the disposal of these lands. The problem is not quite as it was in the case that gave rise to the Crichel Down rules. In Craigavon there are 3,000 acres of surplus land. I want to know, as do the people living on the land, how much of that land will be released. Will part of it or all of it be


released? What are the criteria for deciding which lands shall be released and which shall be held? Who will be given the opportunity to purchase the land?
We must consider the serious facts surrounding the land. Some farmers settled 15 or 16 years ago. They received a price for the land which at that time was a tiny sum compared with today's values. They settled because they were told that the land would be required in the almost immediate future, but to this day they are still living on their holdings, paying rent for land that they probably inherited. There are other farmers who did not settle, who have never been paid for the land, and are still farming the land as their fathers before them did.
Will the Government now say to either of those two classes of people, because of the creation of Craigavon,"You are living on your own land. We vested it 15 years ago; we did not pay you for it; it was worth £500 an acre 15 years ago; it is worth £2,500 an acre today. If you want to stay you will have to give us £2,000 an acre for your land"? To say that that would be the morality of the cesspool would be to praise it. A much more generous spirit than the Crichel Down rule will have to apply to both those classes of landowner who have been placed in this position through the bungling, the delay and the misapprehensions that have surrounded the whole Craigavon project.
I need not enter into the argument whether it could have succeeded. What we do know is that it has fallen far short of expectations and that a dreadful situation has been created for the people who live there and have owned this land in many cases for generations, and who now, through no fault of their own, will find themselves in the greatest difficulty—and in circumstances in which the Government cannot win, for if the Government try to apply the legal framework that has been applied elsewhere, they will come out of it with the muckiest faces that any Government ever had. I hope that the Minister understands that; I hope the House understands it; and I hope that when the Minister deals with the matter he will take account of the feelings of those who live there.
Let us look for a moment at the Crichel Down rule. It says, in effect, that agricultural land should be sold back to the former owner when it is no longer required for public purposes. Normally, when land is being sold back it is land that has been used for the purpose for which it was first acquired either by vesting or by other means; the public use has disappeared and the land has now become available. This is a difficult and intricate subject, which arouses the most ferocious emotions among those who are involved in it.
I should like to quote from a leading article in The Times on the Bloomsbury case last year in regard to the publishers, George Allen and Unwin. The article recalls the words of a previous Home Secretary—Sir David Maxwell-Fyfe—in winding up the debate in the Crichel Down case, when he said:
'Every citizen of good will sees his land go in time of emergency for Government requirements with as much good will as he can muster;'"—
generally speaking, there is not much good will in it—
'but it is taken for a specific purpose, for a specific need of the State. When that purpose is exhausted, when that need is past, what is wrong, on any consideration of morality or justice, in allowing the person from whom the land was taken to have the chance of getting it back?' Crichel Down was not an issue of land

as against buildings, but of morality and justice against administrative oppression."—[Official Report, 20 July 1954; Vol. 530, c. 1292.]
I think there is no one in the House who could disagree with the last part of what I have just read, but I draw the attention of the House to what the Home Secretary of that time was saying. He was generous in his attitude and went very much further than the Crichel Down rule, because he said that the land that was taken for a specific purpose—he did not add the requirement that it must be agricultural land, he said"any land"—should be returned whenever the purpose for which it was taken was exhausted. That is something that has never been put into effect.
Land is not returned whenever the specific purpose for which it was taken is exhausted; it is offered to other Government or local government bodies. In other words, land can be taken for a specific purpose and can be used eventually for a totally different purpose and never returned to the person who at one time owned it and lost it.
This is the first opportunity there has been to consider this matter in the Northern Ireland context, and I hope to raise another matter in that context, too, on another occasion. I hope that the Government will have the courage to reopen the whole Crichel Down settlement, because I believe that full justice for the citizens who suffer is long overdue. There is perhaps no better opportunity than the Craigavon case to start looking again at the rules that surround the return of land to its former owners.
The order is narrow, because it refers only to new towns. I want a far more detailed examination of the whole planning scene. That is overdue. I wish to digress a little, but remain within the rules of order, and illustrate the problems that can arise. I draw attention to article 11(2)(f), which refers to
knowingly making mis-statement when required to give information as to land.
That relates to the Critchel Down theory when land is taken for specific purposes. There are times when land is taken for specific purposes, and its use is then subtly changed so that the original planning application does not apply the end use.
In my constituency there are two such instances that may be of interest to the House and that are relevant to the general point. One is the proposal to play Gaelic Athletic Association football in the Waterside, in Londonderry. There is a change of use from one game to another, but in planning terms there is no change, as they both come under the heading of recreation. Yet no one who knows the position in Northern Ireland could deny that it involves a major change of use.
I wish to quote from the charter of the GAA. It states:
The Association is a National Organisation which has as its basic aim the strengthening of the National Identity in a 32 County Ireland through the preservation and promotion of Gaelic games and pastimes.
Rule 26 states:
British soldiers, navy men, and police shall not be eligible for membership of the G.A.A.
A member of the Association participating in dances, or similar entertainments, promoted by or under the patronage of such bodies, shall incur suspension for at least 3 months.
Rule 10 states:
The National Flag should be displayed at all matches.
That refers to the flag of the Irish Republic. The general foreword states:
Those who play its games, those who organise its activities and those who control its destinies see in the G.A.A. a means


of consolidating our Irish identity. The games to them are more than games—they have a national significance—and the promotion of native pastimes becomes a part of the full national ideal …
It continues:
Those who are unaware of the conditions that called the G.A. A. into being, and of the national significance that attaches to the native games may be forgiven if, to them, one game is as good as another. But those who know our country's history and understand the role that the G.A.A. has played in it will see that …
Anyone reading that charter soon understands that the GAA envisages its aims as more than playing games. It says that in the plainest language. Who are we to disagree with those who belong to, organise and run that association? Yet in planning law that difference from other games is ignored. The games played by that association, the emotions aroused by it, and all the hullaballoo surrounding it, are set at naught and treated as normal sporting activity. It may be law, but it cannot be a good standard of morals. The Minister should bear that in mind when considering such matters. The type of game changes the circumstances. It changes the attitude of people towards the use to which land is put. If those changes are to be introduced, the planning laws should be changed to take account of that.
The same criticisms can be levelled at a new school. Strangely enough, it is in the immediate area that featured in the original plans, which were changed on a subsequent application. The Minister is aware of the school that I am talking about. An amendment was made under the subsequent planning application that might well have given rise to objections if it had appeared in the original application. The Minister is well aware of that. I regret that he has accepted the case of those who wanted the change made. However, the change could not eventually be challenged on planning grounds. As I said, it may be lawful but it is not good morals.
These actions have opened doors that should now be closed firmly and decisively. That can be done by changing the law or by the Minister remembering that he operates a Department in Northern Ireland and not in

England. He operates a Department that has to be much aware of the social and political complexion that will be attached to his decisions.
Planning law is difficult and complex enough, and it needs to be opened up, not only for the reasons that I have submitted but because of the developing interpretation of existing legislation. I was approached some time ago about the provision of a bus shelter. That was not a big event. The provision was sought in the village of Ballykelly. Until recently the planning authority had to consider bus shelters, but under the 1973 order such development is now entirely in the control of district councils. Apparently, it has been in that control since the order became effective, but that was not appreciated until fairly recently. That is a small development, but it is a happy one. It is a road along which the Minister could properly travel. He should go not a short way but the whole hog. It is time that people in Northern Ireland and councils were given some responsibility for something.
Another unusual development has arisen, strangely enough, in the Ballykelly area. It is one that I find rather disturbing. A chap wanted to build a house on a farm lane. He would not have been allowed to so so before the relaxation of the planning rules some years ago. However, whenever he made the application he was told that if he built his house there would be one house too many on the lane. He was told that the public street legislation would come into play and that before he built the house he must bring the lane up to the standard required by that legislation.
That appears to be a rather unusual use of existing law. I wonder how widespread that application of the public street legislation will be. Apparently, it will cost £30,000 to satisfy the requirements of the legislation. In other words, the applicant will be unable to build his dwelling.
I hope that in discussing the order and the planning law that is embodied in it we are firing only the opening shots in what will be a long examination of the detail that is involved in planning law. I hope that it will not be long before we have a debate on planning controls and the relaxation of planning controls that apply to minor developments.

Mr. James Molyneaux: I shall be brief in complementing what has been said by my right hon. and hon. Friends. The new town of Antrim is mentioned in the explanatory document of the order. Although the reference is to some extent qualified, the document states that
Actual progress, except in the case of Antrim, has been at a much slower rate than originally anticipated".
In the same paragraph, it is said:
with the possible exception of Antrim.
No one considering the growth rate in the town of Antrim at the moment would draw a great distinction between it and the town of Craigavon. They have both come to a standstill for roughly the same reasons. I accept that the problem exists in Craigavon on a greater scale than it does in Antrim, but in Antrim there are one or two points which I hope will receive the attention of the Minister. I do not expect him to reply in detail tonight, but I am sure that he will wish his Department to consider the matter in detail.
There are two aspects of the Antrim problem. First, as in Craigavon, there is the land which one would call the"green field" category, which has not yet been touched or developed. The second aspect is land on which there is property, some of it of a fair age and at various stages of disrepair. Some of it is still usable and some of it is being used to carry on profitable business.
There is a mystery over what is known as site B. I know that the Minister has a map and that he looked at the site when he visited Antrim. Site B is distinct from site A. It has been earmarked for what is termed in the Antrim town to which I referred as an area to be used for cultural and entertainment purposes. We are talking about public money, not developers' money. I am not certain that we will see the day when public money will become available on a sufficient scale to provide for cultural facilities. A cinema and some kind of assembly hall are listed. However, the town of Antrim already has a reasonable number of such buildings and cannot be said by any stretch of the imagination to be deprived of places of assembly, particularly as the population is relatively small and as there is not much prospect of it growing to a great extent in the near future.
The Minister should persuade those who make those decisions to face up to that big question and see if a decision can be made. If they can make a decision that in the foreseeable future public money is not likely to be available to be spent on such projects, the present occupants and owners of those businesses should be put out of their misery and should be told that their property will not be required in the foreseeable future. If their property has been vested, it should be handed back to them. If the property has already been purchased by the Department of the Environment, it should be sold back to them on the terms already mentioned by my hon. Friend the Member for Londonderry (Mr. Ross).
I hope that the Minister can ensure that action is taken. All it needs is for a decision to be taken, because site B should not deteriorate while people are struggling to carry on their businesses, having no idea of what the future holds in store.
The development in site A—the larger site—is fairly well advanced. On a recent visit to Antrim, I noticed that

many new shops were nearing completion. However, I fear for the future of even that development. Those shops have been erected by a developer who has been commissioned to do so by the Department of the Environment. However, the other day a table of scales of charges for the new shops was circulated. It will probably come as a surprise to the Minister to find out that the charges for those shops in Antrim are over twice those quoted for the Croydon shopping centre, which is in the middle of an area with a population of approximately 1½ million, whereas in Antrim we are proud that the population is 30,000. There is a difference between 30,000 and 1½ million. Antrim, with its 30,000 inhabitants, is charging fees double those of the Croydon shopping centre.
I hope that prosperity will return to Antrim. I hope that the Minister responsible for commerce will ensure that the Enkalon factory is preserved. However, everyone regretfully accepts that the labour force will be reduced dramatically. As the right hon. Member for Mansfield (Mr. Concannon) knows, there is no alternative source of employment within reach of the town of Antrim. If Enkalon is scaled down—worse still, if it goes—the Minister will have to face the problem of what will happen to the hideously expensive development in the town. There will not be sufficient income for the shops.
In the older part of Church Street, we have family businesses, such as a widow and her daughter selling paint and wallpaper. The Antrim development commission told those people that they would be vested, with compensation. They were told that they would be guaranteed the option to tender for one of the great new shops to be erected. However, the shop would cost between £10,000 and £11,000 a year, plus rates, the cost of shopfitting, which is not included in the initial rental, the cost of installing heating, and so on. The proposition was, therefore, not particularly attractive.
The Department of the Environment stands to lose a great deal if the scheme collapses. I hope that it will, therefore, persuade developers to adopt a more realistic attitude.

Mr. Wm. Ross: My hon. Friend will be aware of the large development at Richmond Street in Londonderry. Perhaps he will ask the Minister whether similar financing arrangements were arrived at for the Antrim development, and what is the standard of the building.

Mr. Molyneaux: I can quite accept that my hon. Friend has the same problem in his constituency. In the days when he and I served in local government those of us who had our feet on the ground warned the starry-eyed planners that they would come a cropper. Even in those days of relative prosperity, we could not see where the money was to come from to flesh out the marvellous plans. We are now reaping the consequences of decisions that were not realistic even then. In present circumstances they are even more unrealistic.
My right hon. Friend the Member for Down, South (Mr. Powell) and the hon. Member for Belfast, West (Mr. Fitt) drew attention to the unsatisfactory method of dealing with Northern Ireland legislation. I remember that when the Local Government, Planning and Land (No. 2) Bill was being debated we took the attitude that it was none of our business. Hon. Members from Great Britain would have been gracious enough to permit us to participate, but


they could not have been blamed for feeling that it was none of our business. We did not participate or vote. I remember even more vividly the short debate on the two orders for England and Scotland implementing the decision provided for in the Act. The Minister, who had come recently from the Northern Ireland Office, explained to the House that he had started with much larger fees, and he gave two examples.
The Minister said that in the case of outline planning permission applications the original maximum fee had been fixed at £20,000, but—and this was the significant part—as a result of representations made during the passage of the Bill, and, more importantly, representations made by individuals and interests affected, he had reduced the fee from £20,000 to £1,000.
At the other end of the scale, the Minister gave an example which was perhaps not quite so dramatic. At the lower level of the common or garden type of application—say, the extension of a bungalow or something of that kind—where the flat rate had originally been £30, as a result of expressions of opinion and objections from smallholders that fee had been reduced to £20.
The Minister may well say tonight that, although in the consultative paper his Department had not set out the fees that it proposed to levy, it had at any rate indicated clearly that it intended to impose such fees. He may therefore ask why representations were not made to his Department on the proposal.
The answer is that the general public, beyond the fairly small circle of people to whom the memorandum was circulated, had no way of knowing because there had been no preliminary debates in Parliament on the matter to give them an opportunity to express their views while there was still time to amend the legislation.
Again, I hope that this reinforces the plea made both by my right hon. Friend the Member for Down, South and the hon. Member for Belfast, West that we should examine the whole problem of legislation for Northern Ireland and treat it no differently from that which obtains in the rest of the kingdom.

Mr. David Mitchell: The House has had a very interesting survey of a major area, which is perhaps bigger than I had anticipated when I first introduced the order. I shall endeavour to deal with the many subjects raised by hon. Members during this short debate. If I fail to cover any points I shall write to the hon. Members concerned afterwards.
The right hon. Member for Down, South (Mr. Powell) referred to the late introduction of new articles and sought assurances that, wherever possible, draft orders should not be extended without adequate opportunity for consultation. I could give him an explanation of the lack of time involved in this case after the House of Lords finally made the additional changes to the Great Britain legislation, but I think that it might be better if I accepted that the situation was not entirely satisfactory in this case and said that I shall endeavour to ensure that there is adequate opportunity for public discussion on future occasions.
The right hon. Gentleman then suggested that much of the draft order could have been introduced in the Great Britain legislation. That would have been complicated and difficult in this case. The use of the Order in Council has been preferred, since, apart from article 13, the substance

of the order is in the form of amendments to legislation contained in the Northern Ireland series of statutes. It would be confusing for a number of amendments to the corpus of Northern Ireland law on local government and planning to be placed in the United Kingdom series rather than in the Northern Ireland series of statutes. Therefore, while I entirely accept the concept that the right hon. Gentleman put forward, I hope that he will accept that in this case it would not have been appropriate.
The right hon. Gentleman went on to ask some specific questions about the articles. He began with article 3, and wanted to know whether we intended to alter the 50 per cent. rate now chargeable. This has been taken as a power because some people have availed themselves of the opportunity to challenge an assessment, have paid only half the rate pending the appeal, and in one way or another have extended the period of appeal so that they have given themselves an unfair advantage. In this case, power is being taken but no specific proposals are being brought forward at this stage.

Mr. J. Enoch Powell: Do I gather from that that the purpose is to enable the fraction of one-half to be increased? If that is so, would not it be proper for the Government, in asking for the power, to indicate what they have in mind? Presumably, they have something in mind, such as three-quarters. The reason seems to me to be a perfectly satisfactory one, but would not it be more proper for the Government to come cleaner still?

Mr. Mitchell: It is our intention to follow the Great Britain legislation. We are not yet in possession of the full thoughts of the Secretary of State as to when and how he wishes to move.
The right hon. Gentleman asked me about the alteration of the existing percentage figure in relation to commission to owners for the collection of rates on behalf of the rating authority. This is part of the extending of powers to local government in Great Britain. We have no immediate plans similarly to follow in Northern Ireland.
The right hon. Gentleman referred to article 7, which he described as obscure and obfuscated. He explained with his usual lucidity exactly what that article was intended to do. As I followed his explanation, I think that I can audit it as being an accurate portrayal of exactly what is intended. He asked specifically why we should seek power to revalue certain separate classes, and what was intended. The intention of the Great Britain legislation has not yet been made known, although one might suppose that in the longer term it is related to the intention to reform or abandon domestic rating. Hon. Members will know that this matter has been with us for a considerable time. There is widespread disquiet about the operation of the existing rating system on the mainland. Power has been taken to deal with changes, should they occur.
The right hon. Gentleman asked me about article 8. He objected to the failure to update the valuation and to the lack of consultation. As for the quinquennial rule, a statutory rule was made on 27 August 1980, which was circulated on 9 September to all those who represent Northern Ireland constituencies. It suspended the 1981 quinquennial review until 1985. Therefore, we are bringing ourselves into line with the situation in Great Britain. I refer to revaluation by order subject to an affirmative resolution. There was an opportunity to pray against that statutory rule. Although that was before my


time at the Northern Ireland Office, I understand that the opportunity was not taken. The Government brought forward that proposal with the objective of saving 1,000 staff on the mainland. I am sure that hon. Members will recognise the important financial saving involved.

Mr. Powell: I apologise for interrupting the hon. Gentleman, but will he clarify the point that the power to defer the valuation—and specifically to do so—already existed and had been exercised and that this article merely makes a permanent change in the quinquennial law? Is that the case?

Mr. Mitchell: No. The change in the statutory rule extended the requirement to 1985. The order extends that further, subject to an affirmative resolution.
Several right hon. and hon. Members, including the right hon. Member for Down, South, referred to the Crichel Down principles and to the return of land that was compulsorily purchased or vested for public purposes and that is now surplus to needs. Several hon. Members doubted whether the convention was being properly applied. I should like to know of any cases in which it is thought that it is not being properly applied. It is our intention that the Crichel Down principles should apply to surplus land in new towns. Indeed, there is considerable interest in relation to surplus land at Craigavon and Antrim.
I was asked by the right hon. Member for Down, South for assurances about article 13. He said that it appeared to give a general and retrospective legislative power to the city council for industrial development purposes. It confers the power not on the city council but on the former city corporation. Nothing more serious is involved than the uncertainty that arose on that question whether the city corporation was, at one stage, ultra vires. This provision puts that matter beyond peradventure.
The right hon. Member for Mansfield (Mr. Concannon) asked me questions about article 10 and sought clarification about planning appeals and the fees involved. He asked whether there was a discrepancy between my introductory remarks and the power contained in the order to charge for planning appeals. I well understand the potential for misunderstanding. I am grateful to the right hon. Gentleman for probing and for having given me the opportunity to clarify the situation.
A charge of £3 per planning application is made for advertising an appeal. We have had to word the provision so that we can continue to make that charge. However, we do not intend to charge a fee for planning appeals. The hon. Member for Belfast, West (Mr. Fitt) said that he had only just become aware that fees were to be charged for planning applications. He wished to know the principle that lay behind that concept. The principle is that, when a planning application is made and processed, certain costs are incurred by staff, and so on who should meet those costs? Should they be met by taxpayers who not interested in the planning application and who may, indeed, not want it, or should they be met, at least in part, by those who seek, and will benefit from, planning permission? I see a good deal of logic in the concept that those who benefit should meet at least part of the costs.

Mr. Powell: Surely the logic of that is that the fee should be charged for the permission and not for the application. There is no benefit if the application is refused.

Mr. Mitchell: The right hon. Gentleman has a certain logic on his side, but I have to tell him that the staff costs of processing the application are incurred when an application is made, whatever the result may be.

Mr. Fitt: The Minister says that certain costs are incurred when an application is made. The applications are vetted by people who are already in the employment of the planning division of the Department of the Environment. If they were not looking at applications, what else would they be doing—drinking tea? Surely that is their job. What extra costs are involved?

Mr. Mitchell: The hon. Gentleman asks me what extra costs are involved. There is the cost of running that service. The question is whether the cost of running that service should be met by the generality of the hon. Gentleman's constituents and the rest of the taxpayers and ratepayers in the Province or should be met at least in part, or contributed towards, by those who are to benefit by it.

Mr. Fitt: Is the Minister suggesting, then, that someone who has a family allowance book, or who is on sickness or social security benefit, should pay the people in the post office for the service rendered? The people working in the post office are surely acting in the same way as civil servants. They are doing a particular job in the interests of the ratepayers or taxpayers. If the Minister carried his present argument to its logical conclusion, nobody would be paid for by the Government.

Mr. Powell: They would have to pay them if they were refused the benefit.

Mr. Mitchell: I was also asked how much money would be raised by the proposal. It is estimated that approximately £1 million will be raised. The hon. Member for Down, North (Mr. Kilfedder)—

Mr. Kilfedder: Will the Minister state how many applications for planning permission have been refused in the last year by the Department of the Environment? How much money has been thrown away on that account?

Mr. Mitchell: I do not happen to have in my head the number of planning applications that were refused before I arrived in the Northern Ireland Office but I shall write to the hon. Member.
The hon. Member for Down, North objected to the principle of planning charges and feared that charges would inhibit building or extension. Improvements and extensions will in general be excluded because of the extension of the concession about not requiring planning consent in relation to small developments, but the cost of a planning application is estimated to be about £40 for an ordinary house.

Mr. Kilfedder: Is the Minister saying that if a family wished to have a flat built to accommodate a mother or father or relatives planning permission would not have to be paid for?

Mr. Mitchell: The hon. Gentleman will have to wait until the result of the consultation that is now going on as to the size of extension that should be permitted. He should have among his papers a consultation paper on planning


controls over minor development that has just been issued. Responses should be addressed to the planning division of the Department of the Environment in Belfast. A charge as small as that against the cost of the whole of a house will certainly not prevent building taking place.
The hon. Gentleman sought stronger enforcement of planning controls. I shall keep in mind the point that he made in discussing that with my advisers.
The hon. Member for Londonderry (Mr. Ross) raised the question of land acquired for public purposes that is now surplus. That was somewhat related to the point made by the right hon. Member for Down, South over the Crichel Down principles. The hon. Member for Londonderry asked for two assurances. The first was that land would be offered back to the former owners, if traceable. I give that assurance. The second assurance concerned technicalities of valuation. I entirely agree that that was a hot potato.
Clearly, one is involved in very complex technical matters of valuation, which have the additional complexity that wherever one draws the line to make a consession for one group of people, one is immediately placing another group in a position in which they, too, feel that they should have a concession. Lying behind all that are the twin problems of land, the value of which has been enhanced by the fact that it has been assigned to be part of and is close to a new town—in other words, where a public decision, public money and public purposes have enhanced the value of the land. Those who have been compensated and received money some time ago may feel that if one were to return the land to the original owners without taking note of the enhanced value they, too, would have a claim for some compensation.
I agree that this is an area of extreme complexity in which there are likely to be strong feelings. We must consider carefully a fair and acceptable solution to the problem, one in which public assets are not given away at prices and values that would lead to the Public Accounts Committee objecting to the terms that have been allowed.
I join with the hon. Gentleman in agreeing about the complexity and sensitivity of the matter and wishing to have time for consultation with hon. Members about the best way to proceed with the minimum of unfairness and with some underlying principles against which subsequent problems that arise can be measured. I wish to discuss them with hon. Members with a view to agreeing what the principles should be and how we should apply them.
The hon. Member for Londonderry raised the question of change of use of a playing field from one form of sports field to another, involving, in this case, the Gaelic Athletic Association, from the rules of which he quoted. Lawfully, there is no change of use. I think that he agreed with that. He said that there was a change of morality. But morality is not a planning matter. The question of the Gaelic Athletic Association rules is not a planning matter. If I

were to take sectarian matters into account I should be forfeiting the impartiality essential to secure respect as the basis upon which planning decisions are taken.

Mr. Wm. Ross: The hon. Gentleman misses the main thrust of my argument, which is that if the people in that area had known that eventually the land would be for a use different from that which they perceived when it was first set up for soccer and cricket there would have been serious objections. The change is to another game which is, in the eyes of the game's promoters, more than a game. That alters the concept behind the original application.

Mr. Mitchell: It might alter the concept behind the original application. It might give rise to considerations whether the rules of a particular association are acceptable or unacceptable. However, those are not planning matters. There are other ways of dealing with them apart from seeking to inject into planning considerations matters that are not related to planning.
The hon. Member for Antrim, South (Mr. Molyneaux) wondered whether the town's development would come to a halt because of the substantial number of redundancies in the area. I place on record how impressed I was, when visiting the town, by the determination of the mayor and the members of the council to ensure the success of what they have put their hands to. I was also impressed by the tremendous emphasis on sporting and recreational facilities in and around the town.
I was asked about site A—the shopping centre that I visited. I understand that public money is not involved. It is a private development. The judgment about the level of rents and potential occupancy is a matter for the private developer.
The hon. Member for Antrim, South asked whether public money would be available for site B. I should have liked notice of that question. I shall write to the hon. Member. I am happy to be identified with the principle that wherever possible we should persuade private sector funds to be used and so prevent unnecessary and avoidable use of public funds. I intend to do that throughout the activities of my Department in the Province.
The hon. Member for Antrim, South was also worried about dispossessed shopkeepers who are offered expensive alternative premises. I have much sympathy with such shopkeepers. If the hon. Member writes to me I shall examine the particulars of the case that he raised.
The House has covered a substantial amount of ground. I believe that I have covered all the points raised. If I have missed any I shall write to the hon. Members concerned. I commend the order to the House.

Question put and agreed to.

Resolved,

That the draft Local C5ovemment, Planning and Land (Northern Ireland) Order 1981, which was laid before this House on 29 January, be approved.

Magistrates' Advisory Committees

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Newton.]

Mr. Bob Cryer: I am grateful for the opportunity to raise this subject on a day which is cloaked by somewhat more widely publicised events.
Advisory committees for magistrates have the function described in the Central Office of Information pamphlet on Justices of the Peace in England and Wales published in 1976. The document states:
About 1,500 appointments of men and women are made every year to the Commissions of the Peace. It is not possible for the Lord Chancellor to have sufficient knowledge of individual people and conditions in all parts of the country to enable him to select suitable candidates for this purpose. In practice therefore the Lord Chancellor appoints Justices on the advice of Committees which have been set up throughout the country. These Advisory Committees were first established following the recommendations of the Royal Commission on Justices of the Peace of 1910. The present system is based on the recommendations of the Royal Commission on Justices of the Peace which reported in 1948. There are about 100 Advisory Committees … Final recommendations of the Lord Chancellor are the responsibility of the Advisory Committee.
Members of Advisory Committees and Sub-Committees are drawn from all sections of the local community. Their identity is not disclosed, in order that they may be shielded from undesirable influences in performing their duties. Each committee, however, has a secretary whose name and address is published and is obtainable on application to the Clerk of a local authority and from any Clerk to the Justices in the area concerned.
The Royal Commission recommended that the advisory committees should consist of about six or seven members. I assume that this has not changed.
Clearly, advisory committees are important because they shape the local magistrates' bench. In my view, such an important function should not be conducted in secret. Secrecy gives rise to the possibility of abuse. For example, one political party can gain dominance. People can use their membership of the advisory committee to gain influence behind the cloak of secrecy. Can the Minister confirm, for example, that a previous Lord Chancellor suggested that the Keighley bench was not properly balanced in its representation of the two major political parties?
Normally, members remain on the advisory committee for six years, half the committee retiring every three years. Sir Thomas Skyrme, in his somewhat complacent book,"The Changing Image of the Magistracy", says about the advisory committees on page 42:
With a view to ensuring that appointments do not become the perquisite of any one political party each committee and subcommittee includes a number of recognised supporters of different parties, though it is a condition of appointment that they must not regard themselves as representing party interests. Every committee contains at least one Conservative and one Labour member and most also have a Liberal. During the past few years a Plaid Cymru supporter has been added to some of the committees in Wales.
Until 1948, the Lord Chancellor usually checked that members being appointed to the advisory committees were, indeed, members of the appropriate party. But the Royal Commission of 1948 somewhat supinely recommended discontinuance of the practice and the Government of the day supinely accepted that recommendation. However, it is worth noting that there was a note of dissent on this issue and one of the members of the Commission recommended that the practice of informing

the political party and confirming the person being nominated to the advisory committee was a member of that party should continue. Hence, today, appointments are made in secret without apparently any reference to the political party concerned.
On the Keighley advisory committee which, I understand, is chaired by Sir John Taylor, a prominent Conservative, knighted for his services to the 1970 Conservative election victory, a person whose name I have but do not propose to reveal was introduced to the advisory committee as the Labour representative. The person concerned was not a member of the Labour Party in the year in question and was chosen presumably under the advice of a local prominent Conservative. I regard that as an unsatisfactory and untenable position which is made the more unsatisfactory by being cloaked in secrecy.
The secretary of the Keighley Labour Party was never approached about the matter and sought further information today but was unable to obtain it. I therefore wish, first, to urge the Minister to restore the pre-1948 position so that the political parties are approached for a member to represent them on the advisory committee instead of this secret method which gives rise to a possible impression of unfairness and which, for all I know, because of the secrecy, may be used to retain the dominance of a particular political party in given circumstances.
My suspicions about advisory committee secrecy and its unsatisfactory nature was given further confirmation about 10 years ago when my wife was nominated to the local bench. She was rung up and informed by a person that she stood no chance since it was understood that I intended to be nominated as the prospective parliamentary Labour candidate for the Keighley area and the Lord Chancellor would not accept political people in that situation. The person who made the telephone call was a magistrate and, I believe, was at the time a member of the advisory committee. I do not know and I cannot confirm that because of the secret nature of the circumstances. I think that the whole gist of that conversation was very unsatisfactory. Whether I stand for a particular party in any capacity has nothing to do with whether my wife should be nominated.
Yet a further person was interviewed by the chairman of Keighley magistrates at the time, and when asked what activities he was interested in pursuing, among other things, in a general discussion of a background nature, he said that he was a supporter of the League against Cruel Sports. He was never asked to become a JP and to this day he wonders if his membership of the League was the cause of his failure to be nominated to the bench.
In a parliamentary answer on 11 December the Attorney-General said of the criteria for the use of magistrates adopted by advisory committes:
The primary consideration is personal suitability in character. Subject to this, it is sought to ensure that so far as possible benches throughout the country are so composed as to reflect a fair balance of the various sectors of the community they serve, as regards age, sex, occupational background, political affiliations, area of residence, and other similar matters". —[Official Report, 11 December 1980; Vol. 996, c. 733.]
If the advisory committees do not reflect these characteristics also it is unlikely that the bench will reflect them.
I well recall being prosecuted in 1978 for speeding, when I pleaded guilty. It was a routine affair and I make no criticism whatsoever of the bench at that time. I was


intrigued to learn—and I made no issue at the time, because I was personally involved—that the bench consisted of the former president of Keighley Conservative Association, the former chairman of the National Union of Conservative Associations and a former Conservative councillor, In my view, such a composition of the bench should not have been allowed to hear cases, because it did not reflect the balance which should exist between all the sections of the community. It certainly did not meet the criteria laid down for the section of magistrates by the advisory committee. It may have been a fluke for that particular day, or it may have been a reflection of the composition of the Keighley bench.
I first raised the issue of the secrecy of the advisory committees in the House in December 1979, because I was concerned about the lack of appropriate representation on the bench of a cross-section of the community, caused, I believed, to some degree by the unjustifiable secrecy surrounding the advisory committees. My local weekly paper, the Keighley News, ran an article headed:"Is it a fair system?" which seemed to me to be a very useful contribution to the debate. Although I welcomed that, I must point out that I disagree frequently with the views of the editor of that paper, but it plays an important role in contributing to this sort of discussion.
The clerk at that date said in answer to my criticism that there was a preponderance of directors or housewives who did not have to go out to work and therefore had the time to contribute to the bench and:
That out of 77 magistrates in the district only half-a-dozen are company directors—of breweries or anything else.
If that is the case, I must point out that they are very much over-represented as a proportion of the population, because about 8 per cent. of the population at large by no means consists of company directors.
The clerk went on to say:
There are housewives, quite naturally. But also represented on the list of Justices of the area are people from the textile industry, a fireman, bus drivers, school teachers and college lecturers, representatives, estate agents and others. I would have thought that was a cross-section of society".
The reporter went on:
While the membership of the local advisory committee is confidential—it is hardly the secretive organisation which Mr. Cryer would suggest.
For instance, [the clerk] is well enough known as being the secretary of the committee, and he can be approached at the Magistrates' Clerk's Office at Bingley court house by anyone who is interested in putting forward nominations.
That is the constant argument put forward, that the clerk is known, but the advisory committee itself is highly secret. I know of one magistrate who was actually appointed to the bench and was serving without any knowledge whatsoever of an advisory committee even being in existence.
When I raised this locally, as I have demonstrated, Keighley Conservatives were very keen to find fault with the National Executive Committee of the Labour Party as regards open government or, as they claimed, the lack of it. But they seemed to be very shy of their own position when I raised the situation with them of the advisory committee and whether they feel that the advisory committee should be open, in the interest of open government.
The article in the Keighley News said that the clerk
agrees that to some extent Mr. Cryer has a point. 'But I would still claim the system we have has a lot of merit. While the local advisory committee is very confidential, that is as it should be or it could be subject to pressures,' he says.

It has been claimed that the advisory committee would be subject to pressure if made public. That claim was made by the Royal Commission in 1948. Paragraph 58 states:
The reason for keeping the membership and proceedings of these committees confidential is to prevent canvassing of members and public discussion of their proceedings.
It is easy to deal with the canvassing of members. Local bodies, for example councils, make many hundreds—probably thousands—of public appointments every year. They have the invariable rule that canvassing is a disqualification. That could easily be made a rule for the membership of advisory committees.
There is another example of where the claim that pressure would be applied is fully answered. I tabled some parliamentary questions on the issue. On 1 December 1980 I asked the Attorney-General:
what are the two areas where advisory committees on magistrates are published; what adverse or beneficial effects have resulted; and whether any further areas propose to follow suit.
The Solicitor-General replied:
The names of the members of the Inner London Advisory Committee have been published in the Magistrates' Year Book since 1970. No significant benefits or adverse effects have come to notice. The Lord Chancellor has approved a proposal by the Essex Advisory Committee to have its membership included in a similar publication which will be available in 1981. No other committee has expressed a wish to do so.—[Official Report, 1 December 1980; Vol. 995, c. 36–37.]
On 11 December I asked the Attorney-General
whether he has received information that any members of the published magistrates advisory panels have faced undue pressure as a result of their names being published; and what is his policy towards the publication of names of the advisory panels.
He replied:
So far only the Inner London Advisory Committee has published the identity of its members. No information of undue pressure has been received by Her Majesty's Government. The policy regarding such publication is that contained in the reply to the hon. Member on 12 November 1980.—[Vol. 992, c. 217–18.]—[Official Report, 11 December 1980; Vol. 996, c. 733.]
That procedure has been carried out for 10 years in a large and important city—one of the largest in the world—and no information of undue pressure has been received by the Government. Surely that example completely negates any claim that publication of the advisory committees would result in their members being subjected to undue pressure.
My hon. Friend the Member for Jarrow (Mr. Dixon) intends to intervene briefly. I conclude my remarks with a number of brief points and requests. We accept that magistrates do an important job. As I have demonstrated openness in selection has not led to pressure. Openness of advisory committees will remove any doubts about membership, any secret influences, a domination of any political grouping or any undue pressures behind closed doors. I suggest that the Lord Chancellor should not simply say that he has not received any requests from committees. He should positively encourage them to publish names.
The varying sentencing and bail policies between benches suggest that a further Royal Commission on the functioning of the magistracy is now due. The 1948 report is well out of date and in sections is quite quaint. I do not have time to quote it, but in page 22 the Royal Commission recommends that members of the bench should become acquainted with the poorer classes. That is. an indication of its lack of modernity.
It is important that allowances for loss of earnings and out-of-pocket expenses should keep pace with inflation,


especially after the swingeing petrol increases announced today, to allow ordinary working men and women to take their full share—that is a majority of places if they are to represent their position in society—on the Bench. Members of the Labour Party and Labour Members of the House of Commons have often been suspicious of the selection process, and openness would rebut those suspicions, which are based on experience.
Employers should be encouraged to release employees. Public bodies already have fairly clear and open rules laid down for service on the Bench, but some private employers do not recognis that they have a public duty to allow and encourage their employees to take their fair share on the magistrates' bench.
I urge the Minister to take serious consideration of the recommendations that I have made. This subject is not often discussed in the House. The magistrates fulfil an important function and we must examine these matters afresh.

Mr. Don Dixon: I thank my hon. Friend the Member for Keighley (Mr. Cryer) for giving me an opportunity briefly to participate in the debate. I shall be brief, so that the Solicitor-General may answer my hon. Friend's questions. I apologise to the hon. and learned Gentleman for the fact that it was only at the last minute that I requested the opportunity to intervene.
I am concerned about the appointment of magistrates in the Jarrow constituency. There has been concern for a considerable time. It is an issue that was taken up by the previous Member for Jarrow, Mr. Ernie Fernyhough, and it was taken up by the hon. Member for Newton (Mr. Evans) when he was the secretary-agent for the consituency. We have never been satisfied with the appointment of magistrates in the constituency.
As my hon. Friend said, magistrates are supposed to be representative of the area in wich they serve. That is not so in South Tyneside. Most of the magistrates who are appointed to serve in the Jarrow constituency live in one area where the housing is predominantly private. The area where the housing is 90 per cent. council controlled has a minority of the magistrates for the Jarrow constituency.
I wrote to the clerk to the magistrates for South Tyneside in April 1980 about an appointment. I eventually received a reply after writing a second letter in July. I referred to someone who lived in Hampshire for part of the year and in Whitley Bay for the remainder of the year. That person was appointed a magistrate to serve in South Tyneside. The chairman of the Jarrow constituency Labour Party, who had lived and worked in the constituency all his life—the only time that he had been out of the constituency was during the war, between 1939 and 1945, when he was injured—had been told unofficially that he had been turned down as a magistrate because he was over 55 years of age when his name was submitted. However, a person who did not live in the district was appointed who was older than the chairman of the local Labour Party.
I hope that the Minister will ensure that there is an inquiry into the appointment system in South Tyneside. If those who conduct the inquiry conclude that the appointments are proper, let them publish the names of

those who serve on the advisory committee so that we know who is responsible for the appointments. At present it is a secret committee.
When I wrote my second letter to the clerk to the magistrates, I was told that, as the advisory committee was appointed by the Lord Chancellor, he was the only person who could give me the information that I requested. That was the final letter that I received from the clerk. That is nonsensical. The clerk lives just down the street from where I live and yet I have to write to the Lord Chancellor to obtain some simple information.
I hope that the Solicitor-General will respond to the issues raised in my brief intervention.

The Solicitor-General (Mr. Ian Percival): I am sure that the hon. Members for Keighley, (Mr. Cryer) and for Jarrow (Mr. Dixon) will realise that I have very little time.

Mr. Cryer: I am sorry.

The Solicitor-General: I do not think that it is a matter for apology. If hon. Members want to raise these matters, it is more important that they should have the opportunity to do so than for me to have sufficient time to reply to them. I can deal later with such matters as I cannot deal with now.
I am glad that the hon. Member for Keighley has stressed the importance of the work done by magistrates. It is enormously important work. Goodness knows what we would do without magistrates.That makes it extremely important that selection is carried out by the best possible method.
On the two specific points put by the hon. Member for Keighley, I am told that we have no knowledge of any previous Chancellor having said that Keighley was not properly balanced politically. However, that will be checked. If I am wrong, I shall write to the hon. Gentleman or, preferably, speak to him. I am also told that it is believed that at present, even if there may have been some imbalance in the past, the political balance on that bench as nearly reflects the political situation in the constituency as possible.
I have no information about the points raised by the hon. Member for Jarrow, but I shall look into them and see that he receives an answer either from me or direct from the Lord Chancellor. I, too, shall be interested in the answer. As these people do such an important job, it is enormously important to get the selection right. In cases where misgivings are felt, I have no doubt that my noble Friend would like to be informed and to have the opportunity to acquaint himself with the facts and give an answer. I do not believe that a formal investigation is necessarily called for.
The hon. Member for Keighley quoted an article from a local paper asking whether the system was fair. That is the important thing. It will never be perfect. When 1,500 people a year are being chosen by 97 committees and when they are trying to reflect certain balances that are pretty indefinite anyway, the system will never be perfect. The point is that it must be fair and be demonstrated to be fair. The hon. Gentleman would say that if that is to be so one essential is that there should be no secrecy. With respect, that is a matter of judgment.
The hon. Member quoted two advisory committees that have asked to have their names published. They are


published in the Magistrates' Year Book, I believe. My noble Friend takes the view that if committees ask for their names to the published, he will consider such a request, but, having regard to the position that has been taken for so long, in particular by the Royal Commision in 1948, he would not be minded to direct that persons who serve in a voluntary capacity should have their names published, unless they so wish.
The best thing that I can do in the short time that I have is to address my mind to the question of whether the system is fair and to put on record what seem to me to be the essentials of the system, which I should like hon. Members to consider and weigh in the balance against the doubts that they have. It is also important that I should do that so that those members of the public who take an interest in the matter may have a little of the other side against which to balance such considerations. Because of the shortness of time I shall have to jump about a little in what I had prepared, but I am sure that the hon. Member for Keighley will not take me to task for that. I shall try to bring out only those parts that explain what the system is, so that people can take that as the starting point for their consideration of whether the system is fair.
There are 97 advisory committees set up to advise the Lord Chancellor, who makes the appointments, except in Greater Manchester, Merseyside and Lancashire, where they are made by the Chancellor of the Duchy of Lancaster. In each case it is necessary for the person making the appointments to have the best advisory committees that he can get. Having regard to the scale of the appointments, he cannot know about each one personally.
The appointments are non-statutory. There is generally one committee for each non-metropolitan county, one for each metropolitan district and, one for the City of London and for some of the larger cities and former boroughs. There are five areas in Greater London, each with its own committee.
I think that it is fairly common knowledge that the Lord Lieutenant is appointed as chairman of each non-metropolitan county committee. Other suitable persons are appointed by the Lord Chancellor as chairmen of the other committees, but usually on the advice of the Lord Lieutenant, who is either an ex-officio member or has a co-ordinating role for the committees in his county.
The members of the committees are appointed by the Lord Chancellor on the advice of the individual chairmen,

usually for a period of six years, with about half the members retiring every three years, so there is a turnover. In general, the Lord Chancellor is willing, on the advice of the chairman, to reappoint members for a total tenure of 12 years, but rarely beyond that.
It is important that hon. Members should know what is the Lord Chancellor's policy and what he seeks to achieve in the composition of the committees. If it then comes to their attention that this is not being achieved in a particular case, I am sure that my noble Friend would like to have that information. The Lord Chancellor seeks to include in each committee at least one recognised supporter of each of the main political parties and one or more members who are politically uncommitted. Geographical representation within the area covered by the committee is also sought, as well as a reasonable age spread among members of both sexes.
The majority of the members are usually themselves justices. But again, just as the Lord Chancellor seeks to include people who are politically uncommitted, so he seeks to include people who are not justices. It is thought that justices are probably best qualified to assess the suitability or otherwise of candidates for recommendation for appointment, but the inclusion of some members who are not justices helps both in the obtaining of names for consideration and in providing a balance of opinion from justices and non-justices alike.
Those are the guidelines that my noble Friend has adopted. That is, in a nutshell, how he would like to see the committees formed and balanced.
The advisory committees endeavour to achieve the Lord Chancellor's aim of making each bench representative of the community which it serves by seeking and finding a sufficient number of candidates from all sections of the community from which to choose. Again, there is a need for a geographical spread of appointments, as well as balances of age, sex and occupation. Furthermore, although politics play no part in the administration of justice, every effort is made to ensure that there is no undue preponderance on benches of justices supporting any one political party. In order to satisfy themselves as far as possible—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-two minutes past Eleven o'clock.